HB1336.DOC

SECTION 1. The legislature finds and declares that the issuance of special purpose revenue bonds under this Act is in the public interest and for the public health, safety, and general welfare. The legislature further finds that the issuance of special purpose revenue bonds and refunding of special purpose revenue bonds under this Act will assist Diamond Head Renewable Resources, LLC in the planning, design, and construction of an ethanol/alcohol fuel refinery and electrical generation plant on Oahu. The issuance of special purpose revenue bonds will also make the use of locally produced ethanol and generation of electricity with renewable sources for biofuels economically feasible and provide numerous benefits including:

(1) Increasing Hawaii's fuel security by reducing dependence on imported fossil fuels;

(2) Helping to meet Hawaii's renewable energy goals by using existing generation assets with on-island produced renewable ethanol and alcohol fuels;

(3) Reducing greenhouse-gas emissions with the use of ethanol in auto fuels and reducing the amount of methane released into the atmosphere;

(4) Providing significant reductions of hydrocarbon, sulfur, toxic compounds, and particulate matter emissions compared to burning petroleum fuel; and

(5) Eliminating the need to purchase and import more than twelve million gallons of fuels per year.

SECTION 2. Pursuant to part V, chapter 39A, Hawaii Revised Statutes, the department of budget and finance, with the approval of the governor, is authorized to issue special purpose revenue bonds in a total amount not to exceed $144,000,000, in one or more series, for the purpose of assisting Diamond Head Renewable Resources, LLC with the planning, designing, constructing, and equipping of an ethanol refinery on Oahu and for renewable electric power generation. The legislature hereby finds and determines that the planning, designing, constructing, and equipping of such a facility constitutes a project as defined in part V, chapter 39A, Hawaii Revised Statutes, and the financing thereof is assistance to an industrial enterprise.

SECTION 3. The special purpose revenue bonds shall be issued pursuant to part V, chapter 39A, Hawaii Revised Statutes, relating to the power to issue special purpose revenue bonds to assist industrial enterprises.

SECTION 4. The department of budget and finance is authorized, from time to time, including times subsequent to June 30, 2014, to issue special purpose revenue bonds in whatever principal amounts the department shall determine to be necessary to refund the special purpose revenue bonds authorized in section 2 and to refund special purpose revenue bonds authorized in this section, regardless of whether the outstanding special purpose revenue bonds or refunding special purpose revenue bonds have matured or are the subject of redemption or whether the refunding special purpose revenue bonds shall be bonds for the multi-project programs described in section 2. In making this determination, the department shall comply with federal law relating to the exemption from federal income taxation of the interest on bonds of the nature authorized by this section.

SECTION 5. As a condition precedent to the issuance of special purpose revenue bonds under this Act, Diamond Head Renewable Resources, LLC or its affiliates shall give priority to utilizing Hawaii waste fuel stock when available and shall not import fuel stock that is the product of agriculture from out of the State. To receive bond financing under this Act, Diamond Head Renewable Resources, LLC shall be required to import fuel stock produced only from biomass sources; provided that Diamond Head Renewable Resources, LLC and its affiliates shall document that sustainable waste sources are utilized; provided further that the documentation shall be transmitted or otherwise made available to the department of business, economic development, and tourism. The department of business, economic development, and tourism shall certify the documentation submitted and shall notify the department of budget and finance in writing as to whether Diamond Head Renewable Resources, LLC and its affiliates are in compliance with this section prior to the issuance of any special purpose revenue bonds being issued pursuant to this Act.

SECTION 6. Notwithstanding any law to the contrary, the interest in bonds issued under this Act shall be subject to state and federal income tax laws.

SECTION 7. The authorization to issue special purpose revenue bonds under this Act shall lapse on June 30, 2014.

SECTION 8. This Act shall take effect on July 1, 2009.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1336
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII