SB834

SECTION 1. The legislature finds that counties are in need of significant capital improvement projects, which have been neglected over time. A recent example is the Waikiki sewer line that ruptured on March 24, 2006, after an extended period of heavy rains. The rupture forced the city and county of Honolulu to divert more than 375,000 gallons of untreated sewage into the Ala Wai canal. There is little doubt that national media coverage of the closure of Waikiki beach and other famous beaches along the south shore of Oahu had a negative impact on Hawaii's major economic industry - tourism. Currently, the city is repairing and replacing parts of the aging sewer line along Ala Wai boulevard. The two-year Kapiolani boulevard underground water and sewer line improvement project that began on September 5, 2006, is another example of a neglected county infrastructure improvement project.

Both the Ala Wai and Kapiolani projects were neglected for years due to a lack in county funds. The emergency sewage spill in March created the urgency to fix the sewer line problem along the Ala Wai while the same emergency situation enabled the city and county to mitigate potential problems in the future by making underground repairs along Kapiolani boulevard. The improvements and repairs on both projects are intended to last for the next fifty years.

The legislature further finds that orderly and planned infrastructure capacity construction is a key foundation for accommodating population growth; developing communities with a better quality of life; creating strategies for affordable housing; and easier land use planning. Past experiences indicate that the lack of adequate infrastructure is a tremendous restriction on accommodating future growth.

As Honolulu, for example, makes plans for a new fixed guide-way system, some of the discussion will focus on balancing between the need to accommodate higher density growth in and around the transit corridor and the need to protect open space and agricultural areas. Infrastructure capacity will need to be increased and improved to accommodate the predicted density growth in and around the transit corridor.

Although the responsibility of constructing basic municipal infrastructure falls primarily on the counties, the State could assist the counties with infrastructure capacity construction, when feasible, by providing supplemental financing. While the counties bear a large amount of responsibility in planning and development, the counties and the State share the responsibility in providing public health and welfare, including managing the State's population growth. Infrastructure capacity construction is an integral part in planning for and managing population growth.

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 36, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§36- County infrastructure capacity construction loan revolving fund. (a) There shall be established within the state treasury a county infrastructure capacity construction loan revolving fund. The revolving fund shall be administered by and be expended by the department of budget and finance to carry out the purposes of this section.

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

(1) Received by the department of budget and finance from any of the counties for the repayment of loan principal and the payment of simple interest; provided that the simple interest charged to a county for the 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 and deposited into the fund from surplus revenues derived from prior fiscal years;

(3) Received from federal grants or subsidies that are granted to the State or counties; and

(4) Received from voluntary contributions.

(c) The department of budget and finance shall expend moneys in the fund to provide loans to counties for the cost, in whole or in part, of infrastructure improvements that would increase the capacity of infrastructure facilities, including sewer, water, drainage, and roads. Eligible costs shall include but not be limited to plans, design, feasibility studies, construction, and materials. Loans shall be provided only for capital improvement projects approved by the respective county council with a view towards planned population and community development growth rather than for maintenance or repair needs.

(d) No loans shall be granted for:

(1) Maintenance or repair costs unless the construction would simultaneously increase the carrying capacity of the infrastructure facility;

(2) Mass transit projects; or

(3) Electrical utilities.

(e) The department of budget and finance shall comply with section 37-47.

(f) The department of budget and finance shall adopt rules in accordance with chapter 91 for purposes of this section."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii 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, to be deposited into the county infrastructure capacity construction loan revolving fund.

SECTION 4. There is appropriated out of the county infrastructure capacity 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 that may be necessary for fiscal year 2008-2009, for the department of budget and finance to provide loans to the counties for infrastructure capacity construction projects.

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 sections 3 and 4 shall take effect on July 1, 2007.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	834
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII