SECTION 1. The legislature finds that counties and some state agencies have aging and limited infrastructure that have been neglected over time and now require a significant capital improvement investment. The 2013 State Report Card on Infrastructure, prepared by the American Society of Consulting Engineers, provided the following assessment of Hawaii's infrastructure:

(1) Dams and levees:

(A) Hawaii's dam safety program has five full-time employees that each oversee an average of 28.4 state regulated dams;

(B) Hawaii has seventy-five high hazard dams;

(D) Hawaii's dam safety program has an annual budget of $754,000; and

(E) Hawaii has approximately sixteen miles of levees according to the Federal Emergency Management Agency (FEMA) Mid-term Levee Inventory database;

(2) Hazardous waste and wastewater:

(A) Hawaii has three sites on the National Priorities List, a list of national priorities among the known releases or threatened releases of hazardous substances, pollutants, or contaminants throughout the United States and its territories; and

(B) Hawaii has reported $1,800,000,000 in wastewater infrastructure needs over the next twenty years;

(3) Airports, bridges, and ports:

(A) Hawaii has fifteen public-use airports;

(B) 146 of the 1,131 bridges in Hawaii (12.9 per cent) are considered structurally deficient;

(D) Hawaii received $28,700,000 from the Federal Highway Bridge Fund in fiscal year 2011; and

(E) Hawaii's ports handled 19,000,000 short tons of cargo in 2009, ranking twenty-ninth in the nation;

(4) Roads and road transit:

(A) Driving on roads in need of repair costs Hawaii motorists $456,000,000 a year in extra vehicle repairs and operating costs or roughly $515 per motorist;

(B) Forty-nine per cent of Hawaii's roads are in poor or mediocre condition;

(D) Hawaii's highway vehicle-miles traveled in 2009 was approximately 7,331 per capita, ranking it forty-eighth in the nation;

(E) Hawaii's gas tax of 47.1 cents per gallon has not been increased since 2012; and

(F) Hawaii has 74,782 annual unlinked passenger trips via transit systems – motor bus, heavy rail, light rail, and commuter rail; and

(5) Public schools, parks, and recreation facilities:

(A) Public school districts in Hawaii spent a total of $215,000,000 on capital outlays for school construction and acquisition of land and existing structures in fiscal years 2005-2008;

(B) Hawaii schools have an estimated $3,400,000,000 in infrastructure funding needs; and

TRIP, a national transportation research group, also released a report in October 2013 that found the Honolulu urban area ranks nineteenth among large cities with a population of more than five hundred thousand in the annual cost to motorists of driving on rough roads and thirteenth in the percentage of roads in poor condition. The report further noted that "[d]riving on roads in disrepair increases consumer costs by accelerating vehicle deterioration and depreciation, increasing the frequency of needed maintenance and requiring additional fuel consumption," as well as increasing the frequency of water main breaks on Oahu each year.

The legislature finds that orderly and planned infrastructure construction is the foundation for planned population growth and desirable communities. It is a public purpose for which public funds should be appropriated and expended, and infrastructure construction should be coordinated and timed or phased with planned development. Adequate infrastructure to accommodate future growth would provide livable communities with a desirable quality of life, make possible strategically situated affordable housing (for example, near job growth), and allow the transfer of development rights to protect and preserve important agricultural lands by targeting growth to specific areas that have necessary infrastructure capacity to support development. Based on population projections prepared by the State, the individual counties would first plan and determine where growth is desirable and then proceed to construct, in coordination with applicable state agencies, the infrastructure to support the planned growth in those areas.

Population increase will occur, and economic growth is necessary, and, therefore, both should be planned for properly. Prior experience indicates that the lack of adequate infrastructure is a severe constraint to future growth. For example, as Honolulu plans for its new fixed guide-way system, 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. Infrastructure capacity must be increased to accommodate higher densities in and around the transit corridor. While this problem is most evident on Oahu, the neighbor islands also suffer from lack of infrastructure capacity to accommodate future growth. It is necessary to assist all counties, in accordance with an orderly and predictable plan for increasing infrastructure capacity, to better utilize existing areas for planned growth and mitigate impacts to areas that are appropriate for growth.

The State's role in dealing with this growth would be to provide coordination with the counties on "regional state infrastructure" construction in areas of planned growth. Although the primary responsibility for basic municipal infrastructure needs continues to reside with the counties, much of the work will need to be coordinated with the State for "regional infrastructure improvements." Infrastructure projects included under this Act are regional sewer, water, drainage, roads, and telecommunications and broadband, if a project would increase the capacity to accommodate future growth, and not solely benefit one particular project. Increased capacity is distinguishable from maintenance. While maintenance would increase the life of the facility or infrastructure, only projects that would result in increased infrastructure capacity would be eligible for supplemental funding under this Act.

The State cannot afford to abandon the counties and must provide financial assistance for improving infrastructure. In addition, while the counties have primary jurisdiction over planning and development, development links the State with the counties to several shared responsibilities under the Constitution of the State of Hawaii, including the following:

(1) Article IX, section 6, relating to management of state population growth;

(2) Article XI, section 3, relating to agricultural lands; and

(3) Article XI, section 5, relating to general laws over the lands owned by or under the control of the State.

The purpose of this Act is to create an infrastructure capacity construction loan revolving fund to provide loans to the counties, state agencies, and private developers for infrastructure improvements. Furthermore, the intent of this Act is to allow for innovative financing techniques, such as tax increment financing and improvement districts, to fund the loan based upon the use of the new infrastructure capacity.

SECTION 2. Chapter 36, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . INFRASTRUCTURE CAPACITY FINANCING

§36- Infrastructure capacity construction loan revolving fund. (a) There is established within the state treasury an infrastructure capacity construction loan revolving fund. The revolving fund shall be administered by the department of accounting and general services. This section shall be deemed to satisfy the requirements of section 37-52.4.

(b) The infrastructure capacity construction loan revolving fund shall consist of the following sources of revenue:

(1) Moneys received by the department of accounting and general services from counties for the repayment of the loan principal and the payment of simple interest from various assessments or fees from special improvement districts, improvement districts, tax increment financing districts, community facilities districts, and other areas where property value increases are captured over periods of time for the purposes of infrastructure financing; 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 not less than per cent; provided further that in no event shall the simple interest charged to a county exceed per cent;

(2) Appropriations from the legislature;

(3) Federal grants and subsidies to the State or counties, if any;

(4) Private investor contributions; and

(5) Voluntary contributions.

(c) The department of accounting and general services shall expend revenues in the fund to make loans to counties, state agencies, or private developers for the costs, in whole or in part, of infrastructure improvements that would increase the capacity of the infrastructure facilities, including regional sewer, water, drainage systems, roads, and telecommunications and broadband.

Loans shall be made only for capital improvement projects approved by the respective county council or state agency with a view towards planned growth rather than upkeep and maintenance.

(d) Eligible costs shall include those for planning, design, feasibility studies, construction, and materials. No loan shall be made:

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

(2) Solely for mass transit or electrical utilities.

The department of accounting and general services may also expend revenues in the fund to repay private investors for their investment plus any interest accrued on their investments made into the fund to finance, in whole or in part, infrastructure improvements that would increase the capacity of the infrastructure facilities, including regional sewer, water, drainage, roads, and telecommunications and broadband.

(e) The department of accounting and general services 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 2015-2016 and the same sum or so much thereof as may be necessary for fiscal year 2016-2017 for deposit into the infrastructure capacity construction loan revolving fund.

SECTION 4. There is appropriated out of the infrastructure capacity construction loan revolving fund the sum of $ or so much thereof as may be necessary for fiscal year 2015-2016 and the same sum or so much thereof as may be necessary for fiscal year 2016-2017 for the making of loans to the counties, state agencies, or private developers for the costs, in whole or in part, of infrastructure improvements that would increase the capacity of the infrastructure facilities.

The sums appropriated shall be expended by the department of accounting and general services for the purposes of this Act.

SECTION 5. 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 2015-2016 and the same sum or so much thereof as may be necessary for fiscal year 2016-2017 for the implementation, administration, and coordination of the infrastructure capacity construction loan revolving fund.

The sums appropriated shall be expended by the department of accounting and general services for the purposes of this Act.

SECTION 6. This Act shall take effect on July 1, 2015.

HOUSE OF REPRESENTATIVES	H.B. NO.	441
TWENTY-EIGHTH LEGISLATURE, 2015		S.D. 1
STATE OF HAWAII