SB1644

SECTION 1. The legislature finds that the Honolulu authority for rapid transportation's project to construct a fixed guideway system from Kapolei to Honolulu has been beset by a multitude of problems over the last fifteen years. The full line from east Kapolei to Ala Moana Center was originally projected to be completed by 2019 at a cost of approximately $5,000,000,000. However, due to delays and mismanagement since this projection was made, the project's length was cut by 1.25 miles; the project's completion date was delayed by twelve years; and the project's cost has more than doubled to $11,000,000,000. The delays have caused a multitude of lawsuits. Most recently, Hitachi Rail sued the city and county of Honolulu and the Honolulu authority for rapid transportation for $324,000,000 in damages allegedly caused by the project's many delays.

The legislature finds that the entire structure of the Honolulu rail project should be revamped to ensure the project is finished without additional delays and cost overruns. This revamping must include a complete overhaul of the project's structure and leadership. In particular, the legislature finds that making the state department of transportation responsible for construction of the project may allow the project to benefit from the department of transportation's expertise in transportation, infrastructure, construction, and procurement.

Accordingly, the purpose of this Act is to transfer to the department of transportation the authority to develop fixed guideway systems in counties having a population greater than five hundred thousand, including the Honolulu Skyline system that is currently being constructed by the Honolulu authority for rapid transportation.

SECTION 2. Chapter 27, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§27- Development of a fixed guideway system. The development of a fixed guideway system in a county having a population greater than five hundred thousand shall be a function of the state government."

SECTION 3. The Hawaii Revised Statutes is amended by adding a new chapter to title 15 to be appropriately designated and to read as follows:

"Chapter

FIXED GUIDEWAY DEVELOPMENT

PART I. GENERAL PROVISIONS

§ -1 Definitions. As used in this chapter:

"Administrator" means the administrator of the project.

"Department" means the department of transportation.

"Develop" means to plan, design, develop, and construct.

"Director" means the director of transportation.

"Fixed guideway system" means a fixed guideway system developed in a county having a population greater than five hundred thousand.

"Multimodal municipal transportation system" means all public transportation systems of the county in which the fixed guideway system is developed, including bus, paratransit, and fixed guideway systems and associated parking and other services.

"Project" means the department of transportation's development of the fixed guideway system pursuant to this chapter.

§ -2 Fixed guideway development; authority of department of transportation. (a) The department shall have the authority to develop a fixed guideway system in a county having a population greater than five hundred thousand, as provided in this chapter.

(b) To perform its duties and functions, the department shall have the following general powers:

(1) To make and execute contracts, project labor agreements, and other instruments requiring execution by the department, on terms as the department may deem necessary and convenient or desirable, with any person or entity in the execution and performance of the department's powers, duties and functions;

(2) To acquire by eminent domain, purchase, lease or otherwise, in the name of the department, all real property or any interest therein necessary for the development of the fixed guideway system; provided that prior to commencing an eminent domain action, the department shall submit to the governor and legislature, in writing, a list of the parcels and areas to be acquired. The department may proceed with the condemnation action so long as the governor approves the condemnation;

(3) To recommend to the governor the sale, exchange or transfer of real property or any interest therein that is under the control of the department. The governor shall take no action to dispose of the property without the written approval of the department, and all proceeds from the disposition shall be deposited into the fixed guideway system special fund;

(4) To direct the development of the fixed guideway system;

(5) To maintain proper accounts in a manner as to show the true and complete financial status of the project and the activities and performance thereof;

(6) To prepare an annual operating budget for the project and an annual capital budget for the development of the fixed guideway system;

(7) To make and alter policies for its organization and internal administration;

(8) To create or abolish positions for purposes of the project, subject to legislative approval, and set their compensation and duties;

(9) To make temporary transfers of positions associated with the project;

(10) To adopt rules pursuant to chapter 91 to effectuate its functions and duties;

(11) To enter into agreements with any public agency or private entity as it deems proper;

(12) To have full and complete control of all real and personal property used or useful in connection with the development of the fixed guideway system, including all materials, supplies, and equipment;

(13) To promote and assist transit-oriented development projects near fixed guideway system stations that promote transit ridership and are consistent with the intent of the adopted community plans and zoning;

(14) To apply for and receive and accept grants of property, money and services and other assistance offered or made available to it by any person, government, or entity, which it may use to meet its capital or operating expenses and for any other use within the scope of its powers, and to negotiate for the same upon terms and conditions as the department may determine to be necessary, convenient or desirable;

(15) No later than twenty days prior to the convening of each regular session, submit an annual report to the legislature on its activities;

(16) Issue revenue bonds in a principal amount as may be authorized by the legislature for purposes approved by the legislature; and

(17) In addition to the general powers under this section, other general or specific powers may be conferred upon the department by law.

§ -3 Administrator; appointment; powers; duties. (a) The director shall appoint an administrator for fixed rail development. The administrator shall not be subject to chapter 76 but shall be included in any benefit program generally applicable to the officers and employees of the State. The director shall set the administrator's salary; provided that the salary shall be commensurate with salaries paid to deputy directors of the departments of the State.

(b) The administrator shall:

(1) Serve as the administrator for the project;

(2) Determine the policies for the development of the fixed guideway system;

(3) Administer all affairs of the project, including any rules adopted for the project;

(4) Sign, with the approval of the director, all necessary contracts for the project, unless otherwise provided by this chapter;

(5) Request and accept, with the approval of the director, appropriations from the legislature;

(6) Request and accept grants, loans, and gifts from other persons and entities;

(7) Determine, with the approval of the governor and the director of transportation, the policy for approval of arrangements and agreements with the federal government and with any public entity or utility owning or having jurisdiction over rights-of-way, tracks, structures, subways, tunnels, stations, terminals, depots, maintenance facilities, air rights, utility lines, and transit electrical power facilities;

(8) Maintain proper accounts in a manner that shows the true and complete financial status of the project and the activities and performance thereof;

(9) Administer programs that promote developments near transit stations that would increase multimodal municipal transportation system ridership;

(10) Review development projects having significant impact on the development of the fixed guideway system;

(11) Plan, administer and coordinate programs and projects of the fixed guideway system that are proposed to be funded, wholly or partially, under federal or state law and required to be transmitted to the appropriate metropolitan planning organization; and

(12) In addition to the general powers under this chapter, other powers as may be provided by law.

§ -4 Fixed guideway system special fund. (a) There is established the fixed guideway system special fund, into which shall be deposited:

(1) All moneys disbursed by the director of finance from the mass transit special fund pursuant to section 248‑2.7;

(2) All revenues generated by the project;

(3) Appropriations designated for the special fund by the legislature;

(4) All federal moneys received for the purpose of developing the fixed guideway system;

(5) Gifts, donations, and grants designated for deposit into the special fund; and

(6) Any interest on moneys in the special fund.

(b) Moneys in the special fund may be expended by the department for the purposes of this chapter, including:

(1) The operating costs of the project;

(2) The capital costs of the fixed guideway system; and

(3) Expenses in complying with the Americans with Disabilities Act of 1990, as amended.

§ -5 Reserve funds. Subject to legislative approval, the department may provide for the accumulation of funds for the purpose of financing major replacements, or extensions and additions to the fixed guideway system, the average estimated annual increment to which, for a period of ten years, shall not exceed fifteen per cent of the gross revenues of the fixed guideway system of the department in any fiscal year.

§ -6 Bond sales. At the request of the department and with the approval of the legislature, the director of finance may sell bonds for the acquisition and development of the fixed guideway system. The proceeds from the sales shall be kept by the director of finance in a separate fund to be used only for the purposes for which the bonds are sold.

§ -7 Audits. (a) The accounts and financial status of the project shall be examined annually by a certified public accountant whose services shall be contracted for by the director of transportation and whose fees shall be paid as an expense of the project. The result of the examination shall be reported to the director, the governor, and the legislature.

(b) The audits required by this section shall be in addition to any other audits required by law.

§ -8 Legal counsel. (a) The attorney general shall be the legal adviser of the project and shall institute and defend any and all actions involving matters under the jurisdiction of the department under this chapter. The attorney general may, with the prior approval of the director, compromise, settle or dismiss any claim or litigation, for or against the department. Before execution, all written contracts to which the department is a party under this chapter shall be approved by the attorney general as to form and legality.

(b) Compensation for the legal work pursuant to subsection (a) shall be as agreed upon by the department and the legislature and shall be paid from the revenues of the project.

(c) Notwithstanding any law to the contrary, the department may employ an attorney to act as its legal adviser and to represent the department in any litigation to which the department is a party.

§ -9 Performance bonds. The department may require an individual or blanket bond in an amount as it deems proper for any or all employees. The bond shall be duly conditioned for the faithful performance of duties. The department may provide that the premium on the bond be paid out of the revenues of the project.

§ -10 Fixed guideway alignments, extensions, and additions. The department shall adhere to the fixed guideway system alignment of the locally preferred alternative approved before the effective date of this section by the legislative body of a county having a population greater than five hundred thousand. Any new alignment, extension or addition to the fixed guideway system alignment shall be subject to legislative approval; provided that any adjustment of the alignment necessitated by the impact mitigation shall not constitute a new alignment for purposes of this section.

§ -11 Transfer of property for fixed guideway system operation and maintenance. As and when any segment of the fixed guideway system has completed its final testing and has been approved to commence revenue service, all real property and interests therein that are under the jurisdiction and control of the department and that are necessary, used, or useful for the operation and maintenance of that segment, shall be transferred to the jurisdiction and control of the county in which the fixed guideway system is located. Upon the transfer, the legislative body of the county shall designate an agency responsible for assuming responsibility for the fixed guideway system segment."

SECTION 4. Section 23-14, Hawaii Revised Statutes, is amended to read as follows:

"§23-14 [~~Rapid transportation authority;~~] Mass transit project; department of transportation; annual review. (a) Beginning on September 5, 2017, and ending on December 31, 2031, the auditor, on an annual basis, shall conduct a review of [~~any rapid transportation authority in the State charged with the responsibility of constructing, operating, or maintaining~~] the department of transportation's project to develop or construct a locally preferred alternative for a mass transit project [~~that receives moneys from a surcharge on state tax established pursuant to section 46-16.8, transient accommodations tax revenues pursuant to section 237D-2(e), or both.~~] in a county having a population greater than five hundred thousand. The annual review shall include a review of documents, including but not limited to invoices, contracts, progress reports, and time schedules, to determine that:

(1) Expenditures by the [~~authority~~] department of transportation comply with the criteria established pursuant to section 46-16.8(f); and

(2) The [~~authority~~] department of transportation follows accounting best practices for substantiating its expenditures.

(b) [~~A rapid transportation authority subject to this section~~] The department of transportation and any private company or agency contracted to provide services for the locally preferred alternative for a mass transit project shall cooperate with and assist the auditor as needed in conducting the annual review, including promptly providing all records and other information requested by the auditor in the course of the annual review.

(c) The auditor shall submit the findings and recommendations of the auditor's review to the legislature and the [~~rapid transportation authority~~] department of transportation no later than twenty days prior to the convening of the immediately following regular session."

SECTION 5. Section 40-81.5, Hawaii Revised Statutes, is amended to read as follows:

"§40-81.5 [~~Rapid transportation authority;~~] Department of transportation; certification statement. (a) Beginning on September 5, 2017, and ending on December 31, 2031, the comptroller, upon the request for payment by the [~~rapid transportation authority,~~] department of transportation, shall verify that the authority's invoices for the capital costs of a locally preferred alternative for a mass transit project comply with section 46-16.8(f).

(b) The [~~rapid transportation authority subject to this section~~] department of transportation shall provide the comptroller with:

(1) The [~~authority's~~] department's financial plan and related systems for accounting, including a budget for a locally preferred alternative for a mass transit project;

(2) Expenditures for capital costs for a locally preferred alternative for a mass transit project;

(3) Expenditures for personnel costs, lease rent, and any other costs associated with the [~~authority's~~] department's management and operations; and

(4) Any other information the comptroller may require to accomplish the purpose of this section.

(c) After submission of invoices by the [~~rapid transportation authority~~] department of transportation for capital costs of a locally preferred alternative for a mass transit project are verified by the comptroller as an acceptable use of funds received pursuant to a surcharge on state tax authorized pursuant to section 46-16.8, the comptroller shall submit a certification statement, including any appropriate supporting documents, to the department of budget and finance for the allocation of funds, if available, pursuant to sections 248-2.7 and 248-2.6(d). The certification statement shall include, at a minimum, the total amount contained in the invoices for capital costs that are verified as an appropriate use of funds pursuant to section 46-16.8(f).

(d) The comptroller may establish rules, exempt from chapter 91, for the purposes of this section.

[(e) For the purposes of this section, "rapid transportation authority" means any entity established by a county in the State for the purpose of constructing, operating, or maintaining a locally preferred alternative for a mass transit project and that receives moneys from a surcharge on state tax established pursuant to section 46-16.8, transient accommodations tax revenues pursuant to section 237D-2(e), or both.]"

SECTION 6. Section 46-16.8, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) [~~Each~~] The county surcharge on state tax in a county with a population greater than five hundred thousand that [~~adopts or extends~~] adopted or extended a county surcharge on state tax ordinance pursuant to subsection (a) or (b) before July 1, 2025, shall [~~use the surcharge revenues received from the State~~] continue to be collected as provided under this section and 237-8.6 and 238-2.6 and shall continue to be administered pursuant to statutes and ordinances as they existed on June 30, 2025. The tax proceeds shall be used by the department of transportation for capital costs of a locally preferred alternative for a mass transit project[;] pursuant to chapter ; provided that [~~revenues~~]:

(1) Revenues derived from the county surcharge on state tax shall not be used:

[~~(1)~~] (A) To build or repair public roads or highways, bicycle paths, or support public transportation systems already in existence before July 12, 2005;

[~~(2)~~] (B) For operating costs or maintenance costs of the mass transit project or any purpose not consistent with this subsection; or

[~~(3)~~] (C) For administrative or operating, marketing, or maintenance costs, including personnel costs, of [~~a rapid transportation authority charged with the responsibility for constructing, operating, or maintaining the mass transit project;~~] the department of transportation;

provided further that nothing in this section shall be construed to prohibit [~~a county from using county~~] the use of funds that are not derived from a surcharge on state tax for a purpose described in [~~paragraph (2) or (3).~~] subparagraph (B) or (C); and

(2) The legislature may make changes to the collection and administration of the county surcharge on state tax through the enactment of legislation."

SECTION 7. Section 237-8.6, Hawaii Revised Statutes, is amended to read as follows:

"§237-8.6 County surcharge on state tax; administration. (a) The county surcharge on state tax, upon the adoption of county ordinances and in accordance with the requirements of section 46-16.8, shall be levied, assessed, and collected as provided in this section on all gross proceeds and gross income taxable under this chapter. No county shall set the surcharge on state tax at a rate greater than one-half per cent of all gross proceeds and gross income taxable under this chapter. All provisions of this chapter shall apply to the county surcharge on state tax. With respect to the surcharge, the director of taxation shall have all the rights and powers provided under this chapter. In addition, the director of taxation shall have the exclusive rights and power to determine the county or counties in which a person is engaged in business and, in the case of a person engaged in business in more than one county, the director shall determine, through apportionment or other means, that portion of the surcharge on state tax attributable to business conducted in each county.

(b) Each county surcharge on state tax that may be adopted, extended, or amended pursuant to section 46-16.8 shall be levied beginning in a taxable year after the adoption of the relevant county ordinance; provided that no surcharge on state tax may be levied:

(1) Before:

(A) January 1, 2007, if the county surcharge on state tax was established by an ordinance adopted before December 31, 2005;

(B) January 1, 2019, if the county surcharge on state tax was established by the adoption of an ordinance after June 30, 2015, but before June 30, 2018;

(C) January 1, 2020, if the county surcharge on state tax was established by the adoption of an ordinance on or after June 30, 2018, but before March 31, 2019;

(D) January 1, 2024, if the county surcharge on state tax was established by the adoption of an ordinance on or after March 31, 2019, but before August 1, 2023; or

(E) January 1, 2025, if the county surcharge on state tax was established by the adoption of an ordinance on or after August 1, 2023, but before December 31, 2023; and

(2) After December 31, 2030.

(c) The county surcharge on state tax, if adopted, shall be imposed on the gross proceeds or gross income of all written contracts that require the passing on of the taxes imposed under this chapter; provided that if the gross proceeds or gross income are received as payments beginning in the taxable year in which the taxes become effective, on contracts entered into before June 30 of the year prior to the taxable year in which the taxes become effective, and the written contracts do not provide for the passing on of increased rates of taxes, the county surcharge on state tax shall not be imposed on the gross proceeds or gross income covered under the written contracts. The county surcharge on state tax shall be imposed on the gross proceeds or gross income from all contracts entered into on or after June 30 of the year prior to the taxable year in which the taxes become effective, regardless of whether the contract allows for the passing on of any tax or any tax increases.

(d) No county surcharge on state tax shall be established on any:

(1) Gross income or gross proceeds taxable under this chapter at the one-half per cent tax rate;

(2) Gross income or gross proceeds taxable under this chapter at the 0.15 per cent tax rate; or

(3) Transactions, amounts, persons, gross income, or gross proceeds exempt from tax under this chapter.

(e) The director of taxation shall revise the general excise tax forms to provide for the clear and separate designation of the imposition and payment of the county surcharge on state tax.

(f) The taxpayer shall designate the taxation district to which the county surcharge on state tax is assigned in accordance with rules adopted by the director of taxation under chapter 91. The taxpayer shall file a schedule with the taxpayer's periodic and annual general excise tax returns summarizing the amount of taxes assigned to each taxation district.

(g) The penalties provided by section 231-39 for failure to file a tax return shall be imposed on the amount of surcharge due on the return being filed for the failure to file the schedule required to accompany the return. In addition, there shall be added to the tax an amount equal to ten per cent of the amount of the surcharge and tax due on the return being filed for the failure to file the schedule or the failure to correctly report the assignment of the general excise tax by taxation district on the schedule required under this subsection.

(h) All taxpayers who file on a fiscal year basis whose fiscal year ends after December 31 of the year prior to the taxable year in which the taxes become effective, shall file a short period annual return for the period preceding January 1 of the taxable year in which the taxes become effective. Each fiscal year taxpayer shall also file a short period annual return for the period starting on January 1 of the taxable year in which the taxes become effective, and ending before January 1 of the following year.

(i) Notwithstanding any other law to the contrary, the county surcharge on state tax in a county with a population greater than five hundred thousand that adopted or extended a county surcharge on state tax ordinance before July 1, 2026, shall continue to be collected and administered pursuant to this section and other statutes and ordinances as they existed on June 30, 2025; provided that the legislature may make changes to the collection and administration of the county surcharge on state tax through the enactment of legislation."

SECTION 8. Section 238-2.6, Hawaii Revised Statutes, is amended to read as follows:

"§238-2.6 County surcharge on state tax; administration. (a) The county surcharge on state tax, upon the adoption of a county ordinance and in accordance with the requirements of section 46-16.8, shall be levied, assessed, and collected as provided in this section on the value of property and services taxable under this chapter. No county shall set the surcharge on state tax at a rate greater than one-half per cent of the value of property taxable under this chapter. All provisions of this chapter shall apply to the county surcharge on state tax. With respect to the surcharge, the director shall have all the rights and powers provided under this chapter. In addition, the director of taxation shall have the exclusive rights and power to determine the county or counties in which a person imports or purchases property and, in the case of a person importing or purchasing property in more than one county, the director shall determine, through apportionment or other means, that portion of the surcharge on state tax attributable to the importation or purchase in each county.

(b) Each county surcharge on state tax that may be adopted, extended, or amended shall be levied beginning in a taxable year after the adoption of the relevant county ordinance; provided that no surcharge on state tax may be levied:

(1) Before:

(A) January 1, 2007, if the county surcharge on state tax was established by an ordinance adopted before December 31, 2005;

(B) January 1, 2019, if the county surcharge on state tax was established by the adoption of an ordinance after June 30, 2015, but before June 30, 2018;

(C) January 1, 2020, if the county surcharge on state tax was established by the adoption of an ordinance on or after June 30, 2018, but before March 31, 2019;

(D) January 1, 2024, if the county surcharge on state tax was established by the adoption of an ordinance on or after March 31, 2019, but before August 1, 2023; or

(E) January 1, 2025, if the county surcharge on state tax was established by the adoption of an ordinance on or after August 1, 2023, but before December 31, 2023; and

(2) After December 31, 2030.

(c) No county surcharge on state tax shall be established upon any use taxable under this chapter at the one-half per cent tax rate or upon any use that is not subject to taxation or that is exempt from taxation under this chapter.

(d) The director of taxation shall revise the use tax forms to provide for the clear and separate designation of the imposition and payment of the county surcharge on state tax.

(e) The taxpayer shall designate the taxation district to which the county surcharge on state tax is assigned in accordance with rules adopted by the director of taxation under chapter 91. The taxpayer shall file a schedule with the taxpayer's periodic and annual use tax returns summarizing the amount of taxes assigned to each taxation district.

(f) The penalties provided by section 231-39 for failure to file a tax return shall be imposed on the amount of surcharge due on the return being filed for the failure to file the schedule required to accompany the return. In addition, there shall be added to the tax an amount equal to ten per cent of the amount of the surcharge and tax due on the return being filed for the failure to file the schedule or the failure to correctly report the assignment of the use tax by taxation district on the schedule required under this subsection.

(g) All taxpayers who file on a fiscal year basis whose fiscal year ends after December 31 of the year prior to the taxable year in which the taxes become effective, shall file a short period annual return for the period preceding January 1 of the taxable year in which the taxes become effective. Each fiscal year taxpayer shall also file a short period annual return for the period starting on January 1 of the taxable year in which the taxes become effective, and ending before January 1 of the following year.

(h) Notwithstanding any other law to the contrary, the county surcharge on state tax in a county with a population greater than five hundred thousand that adopted or extended a county surcharge on state tax ordinance before July 1, 2026, shall continue to be collected and administered pursuant to this section and other statutes and ordinances as they existed on June 30, 2025; provided that the legislature may make changes to the collection and administration of the county surcharge on state tax through the enactment of legislation."

SECTION 9. Section 248-2.6, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (b) to read:

"(b) The amounts deducted for costs of assessment, collection, disposition, and oversight of county surcharges on state tax shall be withheld from payment to the counties or withheld from deposit into the mass transit special fund by the State out of the county surcharges on state tax collected for the current calendar year."

2. By amending subsection (d) to read:

"(d) For a county with a population equal to or less than five hundred thousand that adopts a county surcharge on state tax, after the deduction and withholding of the costs under subsections (a) and (b), the director of finance shall pay the remaining balance on a quarterly basis to the director of finance of each county that has adopted a county surcharge on state tax under section 46-16.8.

For a county with a population greater than five hundred thousand that adopts or extends a county surcharge on state tax ordinance, after the deduction and withholding of the costs under subsections (a) and (b), the director of finance shall administer the remaining surcharge revenues in accordance with section 248-2.7.

The payments shall be made after the county surcharges on state tax have been paid into the state treasury special accounts or the mass transit special fund or after the disposition of any tax appeal, as the case may be. [~~All~~] Except for county surcharge on state tax revenues paid into the mass transit special fund under this paragraph, county surcharges on state tax collected shall be distributed by the director of finance to the county in which the county surcharge on state tax is generated and shall be a general fund realization of the county, to be used for the purposes specified in section 46-16.8 by each of the counties."

SECTION 10. Section 248-2.7, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Upon receiving a certification statement from the comptroller pursuant to section 40-81.5, the director of finance shall allocate and disburse moneys in the mass transit special fund to the [~~director of finance of a county with a population greater than five hundred thousand;~~] fixed guideway system special fund pursuant to section ‑4; provided that the director of finance shall only disburse those amounts that are certified in the certification statement for that county for the purposes specified in section 46-16.8; provided further that revenues allocated from the special fund shall not be used for:

(1) Operating or maintenance costs of the mass transit project or any purpose not consistent with section 46‑16.8(f); or

(2) Administrative, operating, marketing, or maintenance costs, including personnel costs, of [~~a rapid transportation authority~~] an agency charged with the responsibility for constructing, operating, or maintaining the mass transit project;

provided further that the total amount of funds that are available, allocated, and disbursed by the director of finance pursuant to this section shall not be in excess of the total amount indicated on the certification statement. The director of finance may allocate and disburse moneys pursuant to this section on a monthly basis.

Any amounts allocated and disbursed pursuant to this section shall be subject to the availability of funds deposited and on balance in the special fund. The director of finance shall not allocate or disburse any amounts from the special fund that are in excess of any amounts deposited and on balance in the special fund."

SECTION 11. Act 1, Special Session Laws of Hawaii 2017, is amended by amending section 18 to read as follows:

"SECTION 18. [Notwithstanding any law, charter provision, or ordinance to the contrary, in any county with a population greater than five hundred thousand, in order to ensure the appropriate use of state authorized funds to finance a locally preferred alternative for a mass transit project, the president of the senate and speaker of the house of representatives shall each appoint two non-voting, ex-officio members to the board of directors of the county’s rapid transportation authority. The terms for each member appointed pursuant to this section shall be determined by the presiding officer who appointed them.

For the purposes of this section, "county rapid transportation authority" means any entity established by a county in the State with a population greater than five hundred thousand for the purpose of constructing, operating, or maintaining a locally preferred alternative for a mass transit project and that receives moneys from a surcharge on state tax established pursuant to section 46-16.8, Hawaii Revised Statutes, transient accommodations tax revenues pursuant to section 237D-2(e), Hawaii Revised Statutes, or both.] Repealed."

SECTION 12. (a) All rights, powers, functions, and duties of the Honolulu authority for rapid transportation are transferred to the department of transportation.

(b) Subject to legislative approval, the department of transportation may create positions pursuant to section ‑2(b)(8), Hawaii Revised Statutes, to perform its required duties and functions, including the functions transferred to the department of transportation from the Honolulu authority for rapid transportation under this Act; provided that the director of transportation, at the director's sole discretion, may hire an officer or employee who is currently employed by the Honolulu authority for rapid transportation.

(c) Except for officers or employees hired by the department of transportation under subsection (b), no officer or employee of the Honolulu authority for rapid transportation shall be transferred to the department of transportation under this Act. Officers and employees who are approved for hiring by the director of transportation pursuant to subsection (b) shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

(d) No officer or employee of the city and county of Honolulu having tenure who is transferred under this Act shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and the officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; provided further that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

(e) An officer or employee of the city and county of Honolulu who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

(f) If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the city and county of Honolulu with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the city and county of Honolulu as determined by the head of the department or the mayor.

SECTION 13. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the Honolulu authority for rapid transportation relating to the functions transferred to the department of transportation shall be transferred with the functions to which they relate.

SECTION 14. All rules, policies, procedures, guidelines, and other material adopted or developed by the Honolulu authority for rapid transportation or city and county of Honolulu to implement provisions of the revised charter of the city and county of Honolulu or revised ordinances of Honolulu that are reenacted or made applicable to the department of transportation by this Act shall remain in full force and effect until amended or repealed by the fixed guideway development agency, pursuant to chapter 91, Hawaii Revised Statutes.

In the interim, every reference to the Honolulu authority for rapid transportation, its board of directors, or its executive director in those rules, policies, procedures, guidelines, and other material is amended to refer to the department of transportation or its director, as appropriate.

SECTION 15. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 16. This Act shall take effect on July 1, 2025.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1644
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII