HB2624

PART I

SECTION 1. The legislature finds that municipal electric utilities have served communities across the United States for over a century, providing reliable, affordable, and increasingly renewable electricity while returning revenues to local governments and ratepayers.

The legislature further finds that municipal ownership of electric generation has a proven record of success. The Los Angeles Department of Water and Power, established in 1902, began generating hydroelectric power from its water aqueduct infrastructure in 1917 and is now the largest municipal utility in the United States, serving four million residents with over eight thousand megawatts of electric generating capacity while transferring a portion of annual revenues to the Los Angeles general fund. Seattle City Light originated in 1902 under the administration of the Seattle Water Department and in 1905 became the first municipally owned hydroelectric facility in the nation; it is now the tenth largest public utility in the United States, has maintained carbon-neutral status since 2005, and derives approximately ninety-one per cent of its power from hydroelectric sources. The Sacramento Municipal Utility District, created by voter approval in 1923 and operational since 1946, is among the ten largest publicly owned utilities in the country and generates approximately twenty-nine per cent of its power from large hydroelectric facilities. Austin Energy, established in 1895 and serving over five hundred thousand customers, has achieved forty-seven per cent renewable energy generation and is committed to one hundred percent carbon-free generation by 2035. CPS Energy of San Antonio, established in 1860 and acquired by the city in 1942, is the largest municipally owned electric and natural gas utility in the United States, serving over nine hundred seventy thousand electric customers while maintaining combined energy bills among the lowest of the nation's twenty largest cities and generating over ten billion dollars in revenue for San Antonio.

The legislature additionally finds that county water utilities in Hawaii possess significant infrastructure assets, including reservoirs, transmission facilities, and treatment plants, that are suitable for renewable energy generation. Authorizing county water agencies to generate and sell renewable electricity would advance the State's clean energy goals, reduce operational costs for water utilities, provide an additional revenue source to maintain and improve water infrastructure, and follow the successful model of municipal utilities on the mainland.

Accordingly, the purpose of this part is to authorize county boards of water supply to produce, use, and sell electricity generated from renewable energy sources.

SECTION 2. Chapter 54, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§54- Renewable energy generation; authorized. (a) Notwithstanding any other law to the contrary, any board of water supply established under this chapter may:

(1) Generate electricity from renewable energy sources, including but not limited to:

(A) Hydroelectric generation from water transmission and distribution infrastructure;

(B) Solar photovoltaic systems installed on board-owned property or facilities;

(D) Biogas recovery from wastewater or water treatment processes; and

(E) Other renewable energy technologies;

(2) Use electricity generated under this section to offset the operational energy requirements of the board;

(3) Sell electricity generated under this section that exceeds the operational requirements of the board, subject to applicable interconnection requirements and tariffs established by the public utilities commission;

(4) Enter into power purchase agreements, community-based renewable energy projects, or other contractual arrangements for the sale of electricity generated under this section;

(5) Issue revenue bonds pursuant to section 54-22 for the purpose of financing renewable energy generation facilities; provided that the bonds shall be payable solely from revenues derived from the sale of electricity and shall not constitute a general obligation of the county; and

(6) Establish rates and charges for the sale of electricity, subject to approval by the public utilities commission.

(b) Revenues derived from the sale of electricity under this section shall be deposited into the board's water utility fund and shall be used for:

(1) Operation, maintenance, and improvement of water utility infrastructure;

(2) Debt service on bonds issued for renewable energy facilities;

(3) Reduction of water rates charged to customers; or

(4) Development of additional renewable energy capacity.

(c) A board shall not be considered a public utility under section 269-1 solely by reason of generating or selling electricity pursuant to this section; provided that the board shall comply with all applicable interconnection and grid reliability requirements established by the public utilities commission.

(d) The public utilities commission shall adopt rules pursuant to chapter 91 to implement this section, including rules governing:

(1) Interconnection standards for board generation facilities;

(2) Rate structures for electricity sales by boards of water supply;

(3) Reporting requirements; and

(4) Consumer protection standards.

(e) Nothing in this section shall be construed to:

(1) Require any electric utility to purchase electricity from a board at rates exceeding avoided cost, except as otherwise provided by law or rule;

(2) Exempt boards from environmental review requirements under chapter 343; or

(3) Supersede any existing franchise agreements or territorial service obligations of electric utilities.

(f) For the purposes of this section, "renewable energy" has the same meaning as in section 269-91."

SECTION 3. Section 54-15, Hawaii Revised Statutes, is amended to read as follows:

"§54-15 Powers and duties of board. (a) The board of water supply shall manage, control, and operate the waterworks of the county and all property thereof, for the purpose of supplying water to the public in the county, and shall collect, receive, expend, and account for all sums of money derived from the operation thereof and all other moneys provided for the use or benefit of the waterworks and all property used for or held in connection therewith.

(b) The board may generate, use, and sell electricity from renewable energy sources pursuant to section 54- ."

PART II

SECTION 4. The legislature finds that neighborhood boards and other subcounty governing entities serve as vital links between county government and local communities, providing forums for citizen participation and advising county agencies on matters affecting their geographic areas. The legislature further finds that these entities are uniquely positioned to identify and prioritize capital improvement projects, community programs, and other expenditures that address the specific needs of their communities.

The legislature additionally finds that empowering subcounty governing entities with the ability to designate funding streams and submit budget allocation recommendations would strengthen participatory democracy, improve the responsiveness of county government to community needs, and promote more equitable distribution of county resources across all geographic areas.

Accordingly, the purpose of this part is to authorize counties to establish a process by which subcounty governing entities can designate funding streams within the county budget and submit budget allocation resolutions to county councils.

SECTION 5. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§46- Subcounty governing entities; budget allocation process. (a) Each county may, by ordinance, establish a process by which subcounty governing entities recognized by the county may:

(1) Designate funding streams within the county budget for allocation to projects and programs within their geographic boundaries;

(2) Adopt budget allocation resolutions recommending the expenditure of designated funds for specific capital improvement projects, community programs, or other purposes authorized by the county; and

(3) Submit budget allocation resolutions to the chair of the county council budget committee, or equivalent position, for consideration during the annual budget process.

(b) Any county ordinance adopted pursuant to this section shall include provisions for:

(1) The amount or percentage of county revenues to be designated as subcounty governing entity funding streams, which may include but are not limited to:

(A) A per capita allocation based on the population of each subcounty governing entity's geographic area;

(B) A base allocation to each subcounty governing entity plus additional amounts based on geographic area, population, or demonstrated need;

(D) Other allocation methodologies determined by the county council;

(2) Eligible uses of designated funds, which may include capital improvement projects, community programs, public safety initiatives, infrastructure maintenance, environmental restoration, cultural preservation, or other purposes determined by the county council;

(3) Procedures for subcounty governing entities to adopt budget allocation resolutions, including requirements for public notice, public hearings, and voting thresholds;

(4) Deadlines for submission of budget allocation resolutions to the chair of the county council budget committee, or equivalent position;

(5) Procedures for county council review and action on submitted budget allocation resolutions;

(6) Reporting requirements to ensure transparency and accountability in the use of designated funds;

(7) Technical assistance to be provided by county agencies to subcounty governing entities in developing budget allocation resolutions; and

(8) Procedures for resolving disputes regarding budget allocations.

(c) Budget allocation resolutions submitted by subcounty governing entities pursuant to this section shall be advisory to the county council; provided that the county council shall:

(1) Consider each submitted budget allocation resolution during the annual budget process;

(2) Provide a written response to each subcounty governing entity explaining the disposition of its budget allocation resolution; and

(3) To the extent practicable, incorporate subcounty governing entity budget allocation resolutions into the county operating or capital improvement budget.

(d) Nothing in this section shall be construed to:

(1) Limit the authority of the county council to adopt the annual county budget;

(2) Create any entitlement to funding for any subcounty governing entity;

(3) Supersede any existing charter provisions regarding the county budget process; or

(4) Require a county to adopt an ordinance pursuant to this section.

(e) For the purposes of this section:

"Neighborhood board" means a board established pursuant to charter or ordinance to provide a forum for community participation in government.

"Subcounty governing entity" means a neighborhood board, community development district, or other geographic subdivision of a county recognized by charter or ordinance as having authority to advise the county on matters affecting its geographic area."

SECTION 6. Section 46-1.5, Hawaii Revised Statutes, is amended to read as follows:

"§46-1.5 General powers and limitation of the counties. Subject to general law, each county shall have the following powers and shall be subject to the following liabilities and limitations:

(1) Each county shall have the power to frame and adopt a charter for its own self-government that shall establish the county executive, administrative, and legislative structure and organization, including but not limited to the method of appointment or election of officials, their duties, responsibilities, and compensation, and the terms of their office;

(2) Each county shall have the power to provide for and regulate the marking and lighting of all buildings and other structures that may be obstructions or hazards to aerial navigation, so far as may be necessary or proper for the protection and safeguarding of life, health, and property;

(3) Each county shall have the power to enforce all claims on behalf of the county and approve all lawful claims against the county, but shall be prohibited from entering into, granting, or making in any manner any contract, authorization, allowance payment, or liability contrary to the provisions of any county charter or general law;

(4) Each county shall have the power to make contracts and to do all things necessary and proper to carry into execution all powers vested in the county or any county officer;

(5) Each county shall have the power to:

(A) Maintain channels, whether natural or artificial, including their exits to the ocean, in suitable condition to carry off storm waters;

(B) Remove from the channels, and from the shores and beaches, any debris that is likely to create an unsanitary condition or become a public nuisance; provided that, to the extent any of the foregoing work is a private responsibility, the responsibility may be enforced by the county in lieu of the work being done at public expense;

(C) Construct, acquire by gift, purchase, or by the exercise of eminent domain, reconstruct, improve, better, extend, and maintain projects or undertakings for the control of and protection against floods and flood waters, including the power to drain and rehabilitate lands already flooded;

(D) Enact zoning ordinances providing that lands deemed subject to seasonable, periodic, or occasional flooding shall not be used for residence or other purposes in a manner as to endanger the health or safety of the occupants thereof, as required by the Federal Flood Insurance Act of 1956 (chapter 1025, Public Law 1016); and

(E) Establish and charge user fees to create and maintain any stormwater management system or infrastructure; provided that no county shall charge against or collect user fees from the department of transportation in excess of $1,500,000 in the aggregate per year; provided further that no services shall be denied to the department of transportation by reason of nonpayment of the fees;

(6) Each county shall have the power to exercise the power of condemnation by eminent domain when it is in the public interest to do so;

(7) Each county shall have the power to exercise regulatory powers over business activity as are assigned to them by chapter 445 or other general law;

(8) Each county shall have the power to fix the fees and charges for all official services not otherwise provided for;

(9) Each county shall have the power to provide by ordinance assessments for the improvement or maintenance of districts within the county;

(10) Except as otherwise provided, no county shall have the power to give or loan credit to, or in aid of, any person or corporation, directly or indirectly, except for a public purpose;

(11) Where not within the jurisdiction of the public utilities commission, each county shall have the power to regulate by ordinance the operation of motor vehicle common carriers transporting passengers within the county and adopt and amend rules the county deems necessary for the public convenience and necessity;

(12) Each county shall have the power to enact and enforce ordinances necessary to prevent or summarily remove public nuisances and to compel the clearing or removal of any public nuisance, refuse, and uncultivated undergrowth from streets, sidewalks, public places, and unoccupied lots. In connection with these powers, each county may impose and enforce liens upon the property for the cost to the county of removing and completing the necessary work where the property owners fail, after reasonable notice, to comply with the ordinances. The authority provided by this paragraph shall not be self-executing, but shall become fully effective within a county only upon the enactment or adoption by the county of appropriate and particular laws, ordinances, or rules defining "public nuisances" with respect to each county's respective circumstances. The counties shall provide the property owner with the opportunity to contest the summary action and to recover the owner's property;

(13) Each county shall have the power to enact ordinances deemed necessary to protect health, life, and property, and to preserve the order and security of the county and its inhabitants on any subject or matter not inconsistent with, or tending to defeat, the intent of any state statute where the statute does not disclose an express or implied intent that the statute shall be exclusive or uniform throughout the State;

(14) Each county shall have the power to:

(A) Make and enforce within the limits of the county all necessary ordinances covering all:

(i) Local police matters;

(ii) Matters of sanitation;

(iii) Matters of inspection of buildings;

(iv) Matters of condemnation of unsafe structures, plumbing, sewers, dairies, milk, fish, and morgues; and

(v) Matters of the collection and disposition of rubbish and garbage;

(B) Provide exemptions for homeless facilities and any other program for the homeless authorized by part XVII of chapter 346, for all matters under this paragraph;

(C) Appoint county physicians and sanitary and other inspectors as necessary to carry into effect ordinances made under this paragraph, who shall have the same power as given by law to agents of the department of health, subject only to limitations placed on them by the terms and conditions of their appointments; and

(D) Fix a penalty for the violation of any ordinance, which penalty may be a misdemeanor, petty misdemeanor, or violation as defined by general law;

(15) Each county shall have the power to provide public pounds; to regulate the impounding of stray animals and fowl, and their disposition; and to provide for the appointment, powers, duties, and fees of animal control officers;

(16) Each county shall have the power to purchase and otherwise acquire, lease, and hold real and personal property within the defined boundaries of the county and to dispose of the real and personal property as the interests of the inhabitants of the county may require, except that:

(A) Any property held for school purposes may not be disposed of without the consent of the superintendent of education;

(B) No property bordering the ocean shall be sold or otherwise disposed of; and

(C) All proceeds from the sale of park lands shall be expended only for the acquisition of property for park or recreational purposes;

(17) Each county shall have the power to provide by charter for the prosecution of all offenses and to prosecute for offenses against the laws of the State under the authority of the attorney general of the State;

(18) Each county shall have the power to make appropriations in amounts deemed appropriate from any moneys in the treasury, for the purpose of:

(A) Community promotion and public celebrations;

(B) The entertainment of distinguished persons as may from time to time visit the county;

(C) The entertainment of other distinguished persons, as well as, public officials when deemed to be in the best interest of the community; and

(D) The rendering of civic tribute to individuals who, by virtue of their accomplishments and community service, merit civic commendations, recognition, or remembrance;

(19) Each county shall have the power to:

(A) Construct, purchase, take on lease, lease, sublease, or in any other manner acquire, manage, maintain, or dispose of buildings for county purposes, sewers, sewer systems, pumping stations, waterworks, including reservoirs, wells, pipelines, and other conduits for distributing water to the public, lighting plants, and apparatus and appliances for lighting streets and public buildings, and manage, regulate, and control the same;

(B) Regulate and control the location and quality of all appliances necessary to the furnishing of water, heat, light, power, telephone, and telecommunications service to the county;

(C) Acquire, regulate, and control any and all appliances for the sprinkling and cleaning of the streets and the public ways, and for flushing the sewers; and

(D) Open, close, construct, or maintain county highways or charge toll on county highways; provided that all revenues received from a toll charge shall be used for the construction or maintenance of county highways;

(20) Each county shall have the power to regulate the renting, subletting, and rental conditions of property for places of abode by ordinance;

(21) Unless otherwise provided by law, each county shall have the power to establish by ordinance the order of succession of county officials in the event of a military or civil disaster;

(22) Each county shall have the power to sue and be sued in its corporate name;

(23) Each county shall have the power to:

(A) Establish and maintain waterworks and sewer works;

(B) Implement a sewer monitoring program that includes the inspection of sewer laterals that connect to county sewers, when those laterals are located on public or private property, after providing a property owner not less than ten calendar days' written notice, to detect leaks from laterals, infiltration, and inflow, any other law to the contrary notwithstanding;

(C) Compel an owner of private property upon which is located any sewer lateral that connects to a county sewer to inspect that lateral for leaks, infiltration, and inflow and to perform repairs as necessary;

(D) Collect rates for water supplied to consumers and for the use of sewers;

(E) Install water meters whenever deemed expedient; provided that owners of premises having vested water rights under existing laws appurtenant to the premises shall not be charged for the installation or use of the water meters on the premises;

(F) Take over from the State existing waterworks systems, including water rights, pipelines, and other appurtenances belonging thereto, and sewer systems, and to enlarge, develop, and improve the same; and

(G) For purposes of subparagraphs (B) and (C):

(i) "Infiltration" means groundwater, rainwater, and saltwater that enters the county sewer system through cracked, broken, or defective sewer laterals; and

(ii) "Inflow" means non-sewage entering the county sewer system via inappropriate or illegal connections;

(24) (A) Each county may impose civil fines, in addition to criminal penalties, for any violation of county ordinances or rules after reasonable notice and requests to correct or cease the violation have been made upon the violator. Any administratively imposed civil fine shall not be collected until after an opportunity for a hearing under chapter 91. Any appeal shall be filed within thirty days from the date of the final written decision. These proceedings shall not be a prerequisite for any civil fine or injunctive relief ordered by the circuit court;

(B) Each county by ordinance may provide for the addition of any unpaid civil fines, ordered by any court of competent jurisdiction, to any taxes, fees, or charges, with the exception of fees or charges for water for residential use and sewer charges, collected by the county. Each county by ordinance may also provide for the addition of any unpaid administratively imposed civil fines, which remain due after all judicial review rights under section 91-14 are exhausted, to any taxes, fees, or charges, with the exception of water for residential use and sewer charges, collected by the county. The ordinance shall specify the administrative procedures for the addition of the unpaid civil fines to the eligible taxes, fees, or charges and may require hearings or other proceedings. After addition of the unpaid civil fines to the taxes, fees, or charges, the unpaid civil fines shall not become a part of any taxes, fees, or charges. The county by ordinance may condition the issuance or renewal of a license, approval, or permit for which a fee or charge is assessed, except for water for residential use and sewer charges, on payment of the unpaid civil fines. Upon recordation of a notice of unpaid civil fines in the bureau of conveyances, the amount of the civil fines, including any increase in the amount of the fine which the county may assess, shall constitute a lien upon all real property or rights to real property belonging to any person liable for the unpaid civil fines. The lien in favor of the county shall be subordinate to any lien in favor of any person recorded or registered prior to the recordation of the notice of unpaid civil fines and senior to any lien recorded or registered after the recordation of the notice. The lien shall continue until the unpaid civil fines are paid in full or until a certificate of release or partial release of the lien, prepared by the county at the owner's expense, is recorded. The notice of unpaid civil fines shall state the amount of the fine as of the date of the notice and maximum permissible daily increase of the fine. The county shall not be required to include a social security number, state general excise taxpayer identification number, or federal employer identification number on the notice. Recordation of the notice in the bureau of conveyances shall be deemed, at such time, for all purposes and without any further action, to procure a lien on land registered in land court under chapter 501. After the unpaid civil fines are added to the taxes, fees, or charges as specified by county ordinance, the unpaid civil fines shall be deemed immediately due, owing, and delinquent and may be collected in any lawful manner. The procedure for collection of unpaid civil fines authorized in this paragraph shall be in addition to any other procedures for collection available to the State and county by law or rules of the courts;

(C) Each county may impose civil fines upon any person who places graffiti on any real or personal property owned, managed, or maintained by the county. The fine may be up to $1,000 or may be equal to the actual cost of having the damaged property repaired or replaced. The parent or guardian having custody of a minor who places graffiti on any real or personal property owned, managed, or maintained by the county shall be jointly and severally liable with the minor for any civil fines imposed hereunder. Any such fine may be administratively imposed after an opportunity for a hearing under chapter 91, but such a proceeding shall not be a prerequisite for any civil fine ordered by any court. As used in this subparagraph, "graffiti" means any unauthorized drawing, inscription, figure, or mark of any type intentionally created by paint, ink, chalk, dye, or similar substances;

(D) At the completion of an appeal in which the county's enforcement action is affirmed and upon correction of the violation if requested by the violator, the case shall be reviewed by the county agency that imposed the civil fines to determine the appropriateness of the amount of the civil fines that accrued while the appeal proceedings were pending. In its review of the amount of the accrued fines, the county agency may consider:

(i) The nature and egregiousness of the violation;

(ii) The duration of the violation;

(iii) The number of recurring and other similar violations;

(iv) Any effort taken by the violator to correct the violation;

(v) The degree of involvement in causing or continuing the violation;

(vi) Reasons for any delay in the completion of the appeal; and

(vii) Other extenuating circumstances.

The civil fine that is imposed by administrative order after this review is completed and the violation is corrected shall be subject to judicial review, notwithstanding any provisions for administrative review in county charters;

(E) After completion of a review of the amount of accrued civil fine by the county agency that imposed the fine, the amount of the civil fine determined appropriate, including both the initial civil fine and any accrued daily civil fine, shall immediately become due and collectible following reasonable notice to the violator. If no review of the accrued civil fine is requested, the amount of the civil fine, not to exceed the total accrual of civil fine prior to correcting the violation, shall immediately become due and collectible following reasonable notice to the violator, at the completion of all appeal proceedings; and

(F) If no county agency exists to conduct appeal proceedings for a particular civil fine action taken by the county, then one shall be established by ordinance before the county shall impose the civil fine;

(25) Any law to the contrary notwithstanding, any county mayor, by executive order, may exempt donors, provider agencies, homeless facilities, and any other program for the homeless under part XVII of chapter 346 from real property taxes, water and sewer development fees, rates collected for water supplied to consumers and for use of sewers, and any other county taxes, charges, or fees; provided that any county may enact ordinances to regulate and grant the exemptions granted by this paragraph;

(26) Any county may establish a captive insurance company pursuant to article 19, chapter 431; [~~and~~]

(27) Each county shall have the power to enact and enforce ordinances regulating towing operations[.]; and

(28) Each county shall have the power to establish a subcounty governing entity budget allocation process pursuant to section 46- ."

PART III

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2624
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII