HB2618 HD1

SECTION 1. The legislature finds that the climate impact fee, commonly known as the "green fee", enacted in 2025, was established to protect, restore, and sustain Hawaii's natural resources and mitigate the effects of climate change on the State for the benefit of residents and visitors alike. The legislature further finds that the State's natural resource systems face increasing and compounding pressures, including watershed degradation, heightened wildfire risk, declining aquatic ecosystems, impacts to coastal areas from erosion and sea level rise, and widespread reliance on cesspools that threaten public health and coastal water quality.

The legislature additionally finds that effective stewardship of the State's natural and cultural resources depends upon the capacity of executive branch agencies to carry out their core functions. These foundational governmental responsibilities are essential to achieving the purposes for which the green fee was enacted.

This Act reaffirms the State's commitment to safeguarding Hawaii's natural resources for present and future generations while ensuring that green fee revenues are allocated in a transparent, predictable, and mission-aligned manner.

Accordingly, the purpose of this Act is to clarify and refine the allocation of revenues generated by the green fee and to increase transparency regarding how they are expended by:

(1) Establishing a green fee special fund to receive an allocation of green fee revenues;

(2) Establishing various funds to receive allocations of green fee revenues; and

(3) Requiring the governor to request, through a bill separate from the budget or supplemental budget, an amount that approximates green fee revenues, less the amounts allocated to the various funds, to be expended for certain climate change and tourism destination management projects.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to title 12, subtitle 6, to be appropriately designated and to read as follows:

"Chapter

GREEN FEES

§ -1 Definitions. As used in this chapter, unless the context requires otherwise, "department" means the department of land and natural resources.

§ -2 Green fee special fund. (a) There is established in the state treasury the green fee special fund to be administered by the department, into which shall be deposited:

(1) Funds allocated pursuant to section 237D-6.5;

(2) All proceeds from revenue bonds issued by the department of land and natural resources for green fee purposes; and

(3) Appropriations made by the legislature for deposit into the fund.

(b) Moneys in the green fee special fund shall be expended by the department for the following purposes:

(1) The protection, preservation, maintenance, and enhancement of natural resources, including beaches;

(2) Planning, construction, and repair of facilities;

(3) Operation, maintenance, and improvement costs of public lands and beaches; and

(4) Any related debt service and financing agreement costs.

(c) The department shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session that includes a description of expenditures from the special fund."

SECTION 3. Chapter 183, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§183- Watershed, biodiversity, and fire resilience special fund. (a) There is established in the state treasury the watershed, biodiversity, and fire resilience special fund to be administered by the department, into which shall be deposited:

(1) Funds allocated pursuant to section 237D-6.5;

(2) Appropriations by the legislature;

(3) Moneys received from federal, county, or private sources;

(4) Grants, gifts, donations, and reimbursements; and

(5) Any other money directed by law.

(b) Moneys in the watershed, biodiversity, and fire resilience special fund shall be expended by the department for activities of the division of forestry and wildlife to protect, restore, or improve watershed functions, increase groundwater recharge, conserve native biodiversity, create fire-resistant landscapes, and carry out post-fire stabilization and restoration, including but not limited to:

(1) Planning, designing, constructing, and maintaining ungulate-proof fencing and related infrastructure;

(2) Removal and control of feral ungulates;

(3) Invasive species control, native ecosystem restoration, and fuel management;

(4) Native habitat management, restoration of native plant cover, and recovery of threatened and endangered species;

(5) Hazardous fuel reduction, strategic firebreaks, and actions that limit the establishment and spread of fire-promoting vegetation;

(6) Post-fire emergency stabilization, erosion control, and rapid re-vegetation to prevent invasive species dominance and protect downstream resources;

(7) Monitoring, mapping, and applied research necessary for adaptive management and measurement of watershed and fire-related outcomes;

(8) Support for watershed partnerships and cooperative projects across mixed ownerships; and

(9) Equipment, supplies, and operational costs necessary to implement the purposes described in this subsection.

(c) The department shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session that includes a description of:

(1) Expenditures from the special fund;

(2) Acres of priority watersheds and landscapes that are protected, treated, or restored;

(3) Measurable outcomes related to water resource protection, including acres protected or restored and estimated benefits such as recharge or sediment reduction;

(4) Wildfire mitigation and post-fire recovery actions completed;

(5) Status and trends of critical or endangered species or habitats; and

(6) Funds leveraged from non-state sources."

SECTION 4. Chapter 187A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§187A- Aquatic resources conservation special fund. (a) There is established in the treasury of the State the aquatic resources conservation special fund to be administered by the department, into which shall be deposited:

(1) Funds allocated pursuant to section 237D-6.5;

(2) Moneys collected for the purposes of compensatory mitigation from federal or state permitted impacts to aquatic life, aquatic resources, and aquatic habitats;

(3) Moneys collected as fines, bail forfeitures, attorney's fees, and administrative costs for violations of subtitle 5 of title 12 or any rule adopted thereunder, except:

(A) Informer's fees authorized under section 187A-14;

(B) Fines or bail forfeitures for sport fishing violations of this chapter and chapters 188, 189, and 190 pursuant to section 187A-9.5(b)(3); and

(4) Monetary contributions or moneys collected from the sale of aquatic-life-themed and aquatic-resources-themed merchandise; and

(5) Moneys derived from interest, dividend, or other income from paragraphs (1) to (4).

(b) Subject to subsection (c), the aquatic resources conservation special fund shall be expended by the department to:

(1) Develop and carry out aquatic environmental stewardship, climate resilience, and the protection of natural and cultural resources across the State, including the development and implementation of aquatic life and aquatic resource conservation, restoration, enhancement, research, regulatory, enforcement, educational, and other management activities necessary to conserve, restore, protect, and enhance aquatic life and aquatic resources under the jurisdiction of the State;

(2) Develop and carry out restoration and compensatory mitigation measures for impacts to the marine environment, including impacts to the marine environment from federal or state permitted actions, or violations of subtitle 5 of title 12 or any rule adopted thereunder;

(3) Install, maintain, and replace day use mooring buoys and other infrastructure to reduce impacts to the marine ecosystem; and

(4) Make payroll payments for personnel of the department or fund grants-in-aid to or contracts with the university of Hawaii or other qualified organizations or individuals to develop or implement the programs and activities for the conservation and management of aquatic life for commercial purposes.

(c) The aquatic resources conservation special fund shall be held separate and apart from all other moneys, funds, and accounts in the department; provided that any moneys received from the federal government, through federal programs, or from private contributions shall be deposited and accounted for in accordance with conditions established by the agency or private entity from whom the moneys are received; provided further that twenty per cent of all gross revenues collected under subsection (b)(1) and (2) shall be payable to the office of Hawaiian affairs as ceded lands revenues. Any balance remaining in the fund at the end of any fiscal year shall be carried forward in the fund for the next fiscal year.

(d) The department shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session that includes a description of expenditures from the special fund.

(e) Nothing in this section shall be construed to prohibit the use of general funds or the funds of other programs and activities to implement or enforce subtitle 5 of title 12 or any rule adopted thereunder, concerning management and conservation of aquatic life, aquatic resources, and state marine waters and the resources therein."

SECTION 5. 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 Hawaii green infrastructure authority. Funds deposited into the cesspool conversion revolving loan fund shall include:

(1) Funds allocated pursuant to section 237D-6.5;

(2) Moneys appropriated by the legislature;

(3) Funds from federal, state, county, private, or other funding sources, including funds from the department of health under section 342D-83;

(4) 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

(5) 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) The authority shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session that includes a description of expenditures from the special fund.

(h) 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 lawfully be expended. Nothing in sections 37-31 to 37-41 shall require the proceeds of the cesspool conversion revolving loan fund to be reappropriated annually."

SECTION 6. Chapter 205A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§205A- Coastal restoration special fund. (a) There is established in the treasury of the State the coastal restoration special fund to be administered by the lead agency, into which shall be deposited:

(1) Funds allocated pursuant to section 237D-6.5;

(2) Appropriations made by the legislature for deposit into the fund;

(3) All contributions from public or private partners; and

(4) All interest earned on or accrued to moneys deposited in the special fund.

(b) Moneys in the coastal restoration special fund shall be expended by the lead agency for coastal restoration and beach nourishment activities.

(c) The lead agency shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session that includes a description of expenditures from the special fund."

SECTION 7. Section 37-79, Hawaii Revised Statutes, is amended to read as follows:

"[[]§37-79[]] Climate change and tourism destination management; projects; [~~budget~~] expenditure request[.]; green fee special fund. The governor shall request, [in] through a bill separate from the budget or the supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, that an amount [~~of general funds~~] that approximates the additional revenue generated by any increase to the transient accommodations tax rates pursuant to section 237D-2(a)(6) and (c)(4) beginning on January 1, 2026, and section 237D-2(e) beginning on July 1, 2026, and by assessment of the transient accommodations tax on gross rental proceeds derived from cruise fares pursuant to section 237D-2(a), less the sum of the amounts allocated to the various funds pursuant to section 237D-6.5(b)(5) to (8), be expended equally to advance specific projects to:

(1) Protect, manage, and restore the State's natural resources, including native forests, native plants and animals, aquatic resources, coastal lands, and freshwater resources;

(2) Increase the resilience of structures and infrastructure to natural and climate-related disasters, such as hurricanes and sea level rise, and perform hazard mitigation activities, such as wildfire and flood mitigation; and

(3) Improve the visitor experience, mitigate the impacts of tourism on the natural environment, ensure that the State's natural resources are maintained for future residents and visitors, and support destination management, such as park improvements and beach improvement, nourishment, and maintenance projects."

SECTION 8. Section 237D-6.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Except for the revenues collected pursuant to section 237D-2(e), revenues collected under this chapter shall be distributed in the following priority, with the excess revenues to be deposited into the general fund:

(1) $1,500,000 shall be allocated to the Turtle Bay conservation easement special fund beginning July 1, 2015, for the reimbursement to the state general fund of debt service on reimbursable general obligation bonds, including ongoing expenses related to the issuance of the bonds, the proceeds of which were used to acquire the conservation easement and other real property interests in Turtle Bay, Oahu, for the protection, preservation, and enhancement of natural resources important to the State, until the bonds are fully amortized;

(2) $11,000,000 shall be allocated to the convention center enterprise special fund established under section 201B-8;

(3) An allocation shall be deposited into the tourism emergency special fund, established in section 201B-10, in a manner sufficient to maintain a fund balance of $5,000,000 in the tourism emergency special fund; [~~and~~]

(4) $3,000,000 shall be allocated to the special land and development fund established under section 171-19 for:

(A) The protection, preservation, maintenance, and enhancement of natural resources, including beaches;

(B) Planning, construction, and repair of facilities;

(D) Any related debt service and financing agreement costs[.];

(5) $ shall be allocated to the watershed, biodiversity, and fire resilience special fund established pursuant to 183- ;

(6) $ shall be allocated to the aquatic resources conservation special fund established pursuant to 187A- ;

(7) $ shall be allocated to the cesspool conversion revolving loan fund established pursuant to 196- ;

(8) $ shall be allocated to the coastal restoration special fund established pursuant to 205A- ; and

(9) The sum of the amounts allocated to the funds pursuant to paragraphs (5) to (8) subtracted from the tax revenues levied, assessed, and collected pursuant to section 237D-2(e) that are in excess of the revenues realized from the levy, assessment, and collection of tax at the ten per cent rate shall be allocated to the green fee special fund established pursuant to section -2.

All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection."

SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 10. This Act shall take effect on July 1, 3000; provided that sections 7 and 9 of this Act shall take effect on January 1, 2027.

HOUSE OF REPRESENTATIVES	H.B. NO.	2618
THIRTY-THIRD LEGISLATURE, 2026		H.D. 1
STATE OF HAWAII