HB 1618

HOUSE OF REPRESENTATIVES
H.B. NO.
1618
THIRTY-THIRD LEGISLATURE, 2026
H.D. 1
STATE OF HAWAII
S.D. 1
C.D. 1
A BILL FOR AN ACT
RELATING TO CESSPOOL CONVERSIONS.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
���� SECTION 1.� The legislature finds that cesspools are a
source of pollution that threatens the health of Hawaii's people and
environment.� In response to the State's
cesspool pollution problem, legislation was enacted in 2017 that requires all
cesspools not exempt by the director of health to be upgraded or converted to
director of health-approved wastewater systems or connected to sewerage systems
by January 1, 2050.
���� The legislature further finds that
the large upfront costs of cesspool conversions prevent many cesspool owners
from addressing systems that contribute to the daily release of untreated
sewage.� It is in the public interest to
explore all financing mechanisms to accelerate cesspool conversions and provide
Hawaii's homeowners with additional financing options, especially for those not
able to qualify for bank and credit union financing at reasonable rates and
terms.
���� The purpose of this Act is to:
���� (1)� Establish a cesspool
conversion revolving loan fund and direct the Hawaii green
infrastructure authority to establish a cesspool conversion financing program
to provide low-interest or forgivable loans for eligible households to upgrade
or convert existing cesspools in all counties to director of health-approved
wastewater systems or connect properties with existing cesspools to sewerage
systems; and
���� (2)� Allow the
department of health, through a memorandum of agreement, to annually transfer
funding available from the water pollution control revolving fund to capitalize
the cesspool conversion financing program.
���� SECTION 2.� Chapter 196, Hawaii Revised Statutes, is
amended by adding a new section to part IV to be appropriately designated and
to read as follows:
���� "�196-   � Cesspool
conversion revolving loan fund; cesspool conversion financing program.� (a)� There is established in the
state treasury the cesspool conversion revolving loan fund, which shall be
administered by the authority.� Funds
deposited into the cesspool conversion revolving loan fund shall include:
���� (1)� Funds from
federal, county, private, or other funding sources, including funds from the
department of health under section 342D-83;
���� (2)� Moneys received
as repayment of loans and interest payments; provided that the repayment of
loans and interest payments under this paragraph shall not include repayment of
loans and interest collected as a result of funds advanced from proceeds of the
green energy market securitization bonds, clean energy and energy efficiency
revolving loan fund, solar photovoltaic and energy storage loan program, or
condominium loan program; and
���� (3)� Any fees
collected by the authority under this section; provided that moneys collected
as a result of the funds advanced from proceeds of the green energy market
securitization bonds, clean energy and energy efficiency revolving loan fund,
solar photovoltaic and energy storage loan program, and condominium loan
program shall be kept separate from fees collected as a result of funds
advanced from proceeds of the cesspool conversion revolving loan fund.
���� (b)�
Moneys in the cesspool conversion revolving loan fund shall be used to
administer the cesspool conversion financing program to provide low-interest
loans or other authorized financial assistance, including forgivable loans, to
eligible households, with a preference for low- and moderate-income households,
to upgrade or convert existing cesspools in all counties to director of
health-approved wastewater systems or connect properties with existing
cesspools to sewerage systems on terms approved by the authority.� Moneys from the fund may be used to cover
administrative and legal costs of fund management and management associated
with individual loans, which include personnel, services, technical assistance,
data collection and reporting, materials, equipment, and travel for the
purposes of this section.
���� (c)�
Funds appropriated or authorized from the cesspool conversion revolving
loan fund shall be expended by the authority.�
The authority may contract with other public or private entities for the
provision of all or a portion of the services necessary for the administration
and implementation of the cesspool conversion financing program.� The authority may set fees or charges for
fund management and technical site assistance provided under this section.
���� (d)�
All interest earned on the loans, deposits, or investments of the moneys
in the fund shall become part of the cesspool conversion revolving loan fund.
���� (e)�
The authority may establish subaccounts within the cesspool conversion
revolving loan fund as necessary.
���� (f)�
The authority may adopt rules pursuant to chapter 91 or publish cesspool
conversion financing program guidelines to carry out the purposes of this
section.
���� (g)�
Except as otherwise provided by law, expenditures from the cesspool
conversion revolving loan fund, including administrative expenditures, may be
made by the authority without appropriation by the legislature or allotment;
provided that no expenditure shall be made from and no obligation shall be
incurred against the fund in excess of the amount standing to the credit of the
fund or for any purpose for which the fund may not be lawfully expended.� Nothing in sections 37-31 through 37-41 shall
require the proceeds of the cesspool conversion revolving loan fund to be
reappropriated annually."
���� SECTION 3.� Section 196-64,
Hawaii Revised Statutes, is amended to read as follows:
���� "�196-64� Functions, powers, and duties of the authority.� (a)� In
the performance of, and with respect to the functions, powers, and duties
vested in the authority by this part, the authority, as directed by the
director and in accordance with a green infrastructure loan program order or
orders under section 269-171 or an annual plan submitted by the authority
pursuant to this section, as approved by the commission for the green
infrastructure loan program, may:
���� (1)� Make loans and expend funds to finance the
purchase or installation of green infrastructure equipment for clean energy
technology, demand response technology, and energy use reduction and demand
side management infrastructure, programs, and services;
���� (2)� Hold and invest moneys in the green infrastructure special fund in
investments as permitted by law and in accordance with approved investment
guidelines established in one or more orders issued by the commission pursuant
to section 269-171;
���� (3)� Hire employees necessary to perform its
duties, including an executive director.�
The executive director shall be appointed by the authority, and the
employees' positions, including the executive director's position, shall be
exempt from chapter 76;
���� (4)� Enter into contracts for the service of
consultants for rendering professional and technical assistance and advice, and
any other contracts that are necessary and proper for the implementation of the
loan program;
���� (5)� Enter into contracts for the administration of
the loan program, without the necessity of complying with chapter 103D;
���� (6)� Establish loan program guidelines to be approved in one or more
orders issued by the commission pursuant to section 269-171 to carry out the
purposes of this part;
���� (7)� Be
audited at least annually by a firm of independent certified public accountants
selected by the authority, and provide the results of this audit to the
department and the commission; and
���� (8)� Perform
all functions necessary to effectuate the purposes of this part.
���� (b)�
The authority shall submit to the commission an annual plan for the
green infrastructure loan program for review and approval no later than ninety
days prior to the start of each fiscal year.�
The annual plan submitted by the authority shall include the authority's
projected operational budget for the succeeding fiscal year.
���� (c)�
In the performance of the functions, powers, and duties vested in the
authority by this part, the authority shall administer the clean energy and
energy efficiency revolving loan fund pursuant to section 196-65.5 and may:
���� (1)� Make loans and
expend funds to finance the purchase or installation of clean energy technology
and services;
���� (2)� Implement and
administer loan programs on behalf of other state departments or agencies
through a memorandum of agreement and expend funds appropriated to the
department or agency for purposes authorized by the legislature;
���� (3)� Utilize all
repayment mechanisms, including the green energy money saver on-bill program,
financing tools, servicing and other arrangements, and sources of capital
available to the authority;
���� (4)� Exercise powers to
organize and establish special purpose entities as limited liability companies
under the laws of the State;
���� (5)� Acquire, hold, and
sell qualified securities;
���� (6)� Pledge unencumbered net assets, loans
receivable, assigned agreements, and security interests over equipment
financed, as collateral for the authority's borrowings from federal,
county, or private lenders or agencies;
���� (7)� Utilize the
employees of the authority, including the executive director;
���� (8)� Enter into
contracts for the service of consultants for rendering professional and
technical assistance and advice and any other contracts that are necessary and
proper for the implementation of the loan fund program;
���� (9)� Enter into
contracts for the administration of the loan fund program exempt from chapter
103D;
��� (10)� Establish loan
fund program guidelines;
��� (11)� Be audited at
least annually by a firm of independent certified public accountants selected
by the authority and provide the results of the audit to the department and
legislature; and
��� (12)� Perform all
functions necessary to effectuate the purposes of this part.
���� (d)� In the performance of the functions, powers,
and duties vested in the authority by this part, the authority shall administer
the cesspool conversion revolving loan fund and cesspool conversion financing program pursuant to section
196-    and may:
���� (1)� Make loans and
expend funds to finance the upgrade or conversion of existing cesspools in all
counties to director of health-approved wastewater systems or connection of
properties with existing cesspools to sewerage systems;
���� (2)� Implement and
administer the cesspool conversion financing program with funding available
under section 342D-83 provided by the department of health on an annual basis
through a memorandum of agreement and expend funds appropriated to the
department for purposes authorized by the legislature;
���� (3)� Utilize all
repayment mechanisms, financing tools, servicing and other arrangements, and
sources of capital available to the authority;
���� (4)� Utilize the
employees of the authority, including the executive director;
���� (5)� Enter into
contracts for the service of consultants for rendering professional and
technical assistance and advice and any other contracts that are necessary and
proper for the implementation of the cesspool conversion financing program;
���� (6)� Enter into
contracts for the administration of the cesspool conversion financing program
that are exempt from chapter 103D;
���� (7)� Establish
guidelines for the cesspool conversion financing program;
���� (8)� Be audited at
least annually by a firm of independent certified public accountants selected
by the authority and provide the results of the audit to the department and
legislature; and
���� (9)� Perform all
functions necessary to effectuate the purposes of this part.
���� [[(d)]] (e)� The authority shall submit an annual report
for the clean energy and energy efficiency revolving loan fund and the
cesspool conversion revolving loan fund to the legislature no later than
twenty days prior to the convening of each regular session describing the
projects funded and the projected energy impacts."
���� SECTION 4.� There is appropriated out of the Hawaii green
infrastructure special fund the sum of $203,750 or so much thereof as may be
necessary for fiscal year 2026-2027 for the establishment and hiring of one
full-time equivalent (1.0 FTE) program management position and for the purposes
of the cesspool conversion revolving loan fund.
���� The sum
appropriated shall be expended by the Hawaii green infrastructure authority for
the purposes of this Act.
���� SECTION 5.� Statutory material to be repealed is
bracketed and stricken.� New statutory
material is underscored.
���� SECTION 6.� This Act shall take effect upon its approval;
provided that section 4 shall take effect on July 1, 2026.
Report Title:
HGIA;
Cesspool Conversion Financing Program; Cesspool Conversion Revolving Loan Fund;
Hawaii Green Infrastructure Special Fund; Appropriation
Description:
Establishes
a Cesspool Conversion Revolving Loan Fund, to be
administered by the Hawaii Green Infrastructure Authority, to provide financial
assistance, including low-interest or forgivable loans, to eligible homeowners
for the upgrade, conversion, or connection of cesspools.� Appropriates funds for the establishment
and hiring of a program management position and for the purposes of the Cesspool Conversion Revolving Loan
Fund. �(CD1)
The summary description
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not legislation or evidence of legislative intent.