Report Title:

County Infrastructure Capacity Construction Loan Revolving Fund

 

Description:

Establishes the county infrastructure capacity construction loan revolving fund and appropriates moneys to support the counties' infrastructure improvement efforts by loaning funds for capital improvement costs from the revolving fund.

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1602

TWENTY-FOURTH LEGISLATURE, 2007

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

relating to infrastructure.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


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

     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 flooding rains.  The rupture forced the city and county of Honolulu to divert untreated sewage into the Ala Wai canal, while attempting to fix 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 sewage spill no doubt had a negative impact on one of our major economic industries, tourism. 

     Another example is the two-year Kapiolani boulevard underground utility improvement for new water and sewer lines which began on September 5, 2006.  Both projects will fix aging underground utilities that were neglected for many years for lack of county funds until a dire emergency situation was created in the case of the Ala Wai, or until a disaster was averted ahead of time in the case of Kapiolani boulevard.  Both construction projects are intended to make improvements that 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.  Adequate infrastructure to accommodate future growth would provide livable communities with a desirable quality of life, make strategically situated affordable housing possible (for example, near job growth), and allow for transfer of development rights to protect and preserve important agricultural lands by targeting growth to specific areas that have the necessary infrastructure capacity to support development.  Planned infrastructure capacity construction requires counties to first determine where development is desirable and then proceed to construct the infrastructure to support a development, rather than the current practice of development followed by infrastructure.

     Population increase and growth is necessary and should be properly planned.  Experience indicates that the lack of adequate infrastructure is a tremendous restriction to accommodate future growth.  For example, as Honolulu plans for its new fixed guide-way 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.  The infrastructure capacity must be increased to accommodate higher densities in and around the transit corridor.  While this problem focuses on Oahu, the neighbor islands similarly 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 developed areas for planned growth and mitigate impacts to areas that are appropriate for immediate growth.

     While the primary responsibility for basic municipal infrastructure needs continues to rest with the counties, the State can assist the counties by offering an incentive to infrastructure capacity construction with supplemental financing wherever and whenever feasible.  Infrastructure projects that are included under this Act are sewer, water, drainage, and roads, so long as the project would increase the capacity to accommodate future growth.  Increased capacity is distinguishable from maintenance.  While maintenance would increase the life of the facility or infrastructure, only projects that would result in increased capacity would 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.  The counties are the first and last stop when it comes to planning and development.  Development is linked to several shared responsibilities under the constitution of the State of Hawaii, including:

     (1)  Article IX, section 6, relating to management of state population growth to protect the public health and welfare;

     (2)  Article XVI, section 5, relating to intergovernmental relations to provide cooperation in matters affecting the public health, safety, and general welfare; and

     (3)  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. 

     (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 as federal grants and subsidies to the state or counties, if any; and

(4)  Voluntary contributions.

     (c)  The department shall expend moneys in this 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 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 $      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 deposit into the county infrastructure capacity construction loan revolving fund.

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

     SECTION 4.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect upon its approval; provided section 3 shall take effect on July 1, 2007.

 

INTRODUCED BY:

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