SB3228 SD1

SECTION 1. The legislature finds that the State's visitor industry constitutes essential economic infrastructure that supports statewide employment, tax revenues, and public services, while also relying heavily on energy, water, transportation, and coastal assets that are increasingly vulnerable to climate-related risks.

The legislature further finds that strategic, capital-based sustainability and climate resilience investments in visitor industry facilities, particularly in hotels, cruise ship operations, passenger terminals, and port-related infrastructure, can reduce greenhouse gas emissions, improve energy and water efficiency, mitigate climate risks, and reduce long-term public infrastructure and disaster recovery costs borne by the State.

Additionally, the legislature finds that in 2025, the State enacted a 0.75 per cent increase to the transient accommodations tax, commonly referred to as the "Green Fee", to create a dedicated funding source to support climate resilience, environmental protection, and sustainability initiatives related to the visitor industry. According to the office of the governor, the increased transient accommodations tax is projected to generate approximately $100 million in tax revenues annually.

Furthermore, the legislature finds that leveraging limited public funds to support voluntary, outcome-driven, private-sector investments through competitive, matching grants can achieve measurable environmental and economic benefits without imposing new regulatory mandates or creating ongoing financial obligations for the State.

Accordingly, the purpose of this Act is to establish within the department of business, economic development, and tourism a time-limited, performance-based matching grant program to support voluntary sustainability and climate resilience investments in visitor industry infrastructure, maximize the return on public investment, and ensure transparency and accountability in the use of public funds.

SECTION 2. Chapter 201, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§201- Sustainable tourism infrastructure matching grant program. (a) There is established within the department a competitive, performance-based sustainable tourism infrastructure matching grant program to support one-time capital investments that advance measurable sustainability and climate resilience outcomes within the State's visitor industry.

(b) Eligible applicants may include but are not limited to:

(1) Hotels, resorts, and other transient accommodations;

(2) Cruise ship operators;

(3) Passenger terminal operators;

(4) Port or harbor facilities that directly support visitor transportation; and

(5) Other visitor-serving facilities, as determined by the department, that demonstrate a clear nexus to sustainability or climate resilience outcomes.

(c) Grant funds shall be used exclusively for one-time capital expenditures that produce measurable sustainability or climate resilience outcomes, including but not limited to:

(1) Energy efficiency retrofits or electrification;

(2) Renewable energy or emissions-reduction infrastructure;

(3) Water efficiency, conservation, or reuse systems;

(4) Waste reduction or materials management infrastructure;

(5) Climate adaptation or resilience improvements, including flood mitigation; and

(6) Passenger terminal or port facility improvements that reduce environmental impacts.

(d) Grant funds shall not be used for ongoing operating expenses, routine maintenance, or activities that are otherwise required by law.

(e) All grants awarded under this section shall require a private-sector matching contribution, in an amount determined by the department, to ensure shared investment, fiscal discipline, and leverage of state funds.

(f) In awarding grants, the department shall prioritize projects that:

(1) Are implementation-ready;

(2) Demonstrate clear, measurable outcomes;

(3) Leverage significant private capital;

(4) Reduce long-term infrastructure risk or public cost exposure; and

(5) Align with statewide climate and economic resilience goals.

(g) The department shall submit an annual report of its findings and recommendations, including any proposed legislation, on the grant program to the legislature no later than twenty days prior to the convening of each regular session, beginning with the regular session of 2027. The report shall include, at a minimum:

(1) The number and amount of grants awarded;

(2) Types and locations of projects funded;

(3) Amount of private matching funds leveraged;

(4) Quantifiable sustainability or climate outcomes achieved; and

(5) An assessment of program effectiveness relative to stated goals.

(h) The department may adopt rules pursuant to chapter 91 to carry out 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 2026-2027 for the sustainable tourism infrastructure matching grant program established pursuant to section 2 of this Act.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	3228
THIRTY-THIRD LEGISLATURE, 2026		S.D. 1
STATE OF HAWAII