[{"_1":2,"_99":-5,"_100":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32,75,87],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":68,"_69":70,"_71":68,"_72":73,"_74":73},"mediaId",6254773,"mediaKeyId","3169015-cb0436458bf172bee3fd0980f196da72","parentId",3169015,"title","Honolulu bond counsel warns rate cuts could breach covenants as council debates phased sewer‑fee increases","audioSeconds",370,"startMs",1204000,"endMs",1574000,"viewUrl","/Search/View?dp=1&key=3169015-cb0436458bf172bee3fd0980f196da72&start=1204&end=1574","thumbnailUrl","https://assets.pipeline.soar.com/3169015-cb0436458bf172bee3fd0980f196da72/thumbnail_1204000.jpg","articleUrl","/articles/6254773/Honolulu-City/Honolulu-County/Hawaii/Honolulu-bond-counsel-warns-rate-cuts-could-breach-covenants-as-council-debates-phased-sewerfee-increases","mediaUrl","https://secure.pipeline.soar.com/6254773-1f0f2c839f0e8d953804fb4ecb0d4461/orig.mp4?Expires=1771163962&Signature=ednDlnXHKhLjcIgx3ZcTodg8r4aZ4XZN~xMd2xfm1l8t5X9Nh1Ec-3ssoz35wRNHgXEG~-4zjIjv1mJUt9XlJ18ZXeC9KW6ePIJI4a-k-06WtlmingeZQK2br35NxcZSyTI35Mo87F5D4Mx76cvW4knCvMk0tVBTNRmw3-nSEWkeKPh~wnaSwy6npdDwkkbEH~fAUaxiF79VUm6shoC6rCVNflmmekGMmJN3lC-LhkknVZhyADf60SsdZsEsGHKDog0JEGiWUSJHSF98kXJD2VikAAAejKebA1CrzmTZSQ5DruzwWC64JxblGSLjpCcg9y7anZw-Ypz26cNTrTaYLA__&Key-Pair-Id=KUT5TJCACFTXG","author","City Council of Honolulu, HI","date","2025-05-01T17:06:26.94Z","article","Honolulu — Bond counsel and city finance officials told the Budget Committee that the city’s wastewater bonds include a legally binding “rate covenant” that requires sewer rates be set at levels sufficient to pay operation, maintenance and debt service plus a cushion. Committee members considered a proposed CD2 that paces increases and shifts more of the monthly charge from a fixed fee to a volumetric (per‑gallon) charge to reward lower water use.

John Wong, partner and the city’s bond counsel, said the council’s authority to set rates is central to investors’ confidence. “Investors view the city’s commitment to set rates to meet the rate covenant as a critical and almost sacred component of their evaluation,” Wong told the committee, warning that a material failure to meet the covenant “could lead to a default under the resolutions and entitle bondholders to pursue legal remedies.” He noted the city has roughly $2.5 billion in wastewater bonds outstanding and that ratings and borrowing costs could be harmed by a failure to demonstrate ongoing compliance.

Director Roger Babcock of the Department of Environmental Services and Director of Budget and Fiscal Services Andrew Quano joined Wong for the briefing. Babcock presented a revised rate schedule labeled “CD2” that phases some increases to reduce immediate bill shock: the CD2 package would start with a smaller first‑year increase (6% in the presented option, versus 9% in an earlier proposal), then apply larger increases later in the 10‑year plan so the program remains revenue‑neutral for the modeled capital and operating needs.

The CD2 proposal also shifts the share of the monthly charge so a larger portion is volumetric (consumption‑based): proposals examined a 40/60 fixed/volumetric split (versus the current roughly 70/30 split). Under the 6% phased option with a 40/60 split, the consultants’ tables showed low water users would pay less in early years compared with the original 9% plan, while high water users would pay more. Babcock said the change was intended to promote equity and conservation while still meeting debt and operating needs.

Committee members pressed for details on the rate‑model assumptions and equity measures. Council Member Cordeiro asked whether technology or revenue sources other than rates (for example, using general‑fund transfers or other revenue streams) could be used to reduce rate pressure; bond counsel said the critical legal requirement is that pledged wastewater revenues satisfy the rate covenant, but that council could consider other revenue sources so long as the required pledged revenues are preserved. Quano said administration staff were exploring options including one proposal discussed by council to use a share of the transient accommodations tax to cover system costs.

Officials also proposed a customer assistance program (CARES) to mitigate hardship. Babcock said a $10 million annual program with a monthly credit (EY’s modeling examples included $20 or $10 per household) would subsidize thousands of households. Using a $20 monthly credit as an example, $10 million could reach roughly 41,666 households (because $20/month equals $240/year). The department suggested income‑eligible thresholds (for example, 80% of area median income, ALICE thresholds, or 300% of the federal poverty level) as eligibility options.

Public commenters voiced concern about the size and timing of increases. One resident said the proposed bills would be onerous for families who already face high costs of living in Honolulu. The committee did not adopt rates at the meeting; Chair Waters and other members signaled they wanted to keep discussing changes and possible offsets and affirmed the need to protect the city’s bond covenants.

Ending — Committee members asked departments to refine the modeling, provide additional options for mitigating impacts on low‑income households, and deliver the bond‑covenant language used in the city’s wastewater bond resolutions for review. No vote to set rates occurred at the meeting, but staff and bond counsel warned the council that any adopted rate plan must meet the bond rate covenant to avoid legal and credit consequences.","mediaType","Video","parentTitle","2025-04-29 Budget","oneSentenceSummary","John Wong, partner and bond counsel, told the Budget Committee that investors and rating agencies treat the sewer bond “rate covenant” as critical and warned that failing to set rates sufficient to meet that covenant could expose the city to legal remedies and higher borrowing costs.","taxTitle","Honolulu City, Honolulu County, Hawaii","taxId",61746,"location","headline","","shortSummary",{"_33":76,"_35":36,"_37":38,"_39":77,"_41":78,"_43":79,"_45":80,"_47":81,"_49":82,"_51":83,"_53":84,"_55":56,"_57":58,"_59":85,"_61":62,"_63":64,"_65":86,"_67":68,"_69":70,"_71":68,"_72":73,"_74":73},6254777,"Consultants say Honolulu empty‑homes tax could raise tens of millions; key design choices still unresolved",1471,196000,1667000,"/Search/View?dp=1&key=3169015-cb0436458bf172bee3fd0980f196da72&start=196&end=1667","https://assets.pipeline.soar.com/3169015-cb0436458bf172bee3fd0980f196da72/thumbnail_196000.jpg","/articles/6254777/Honolulu-City/Honolulu-County/Hawaii/Consultants-say-Honolulu-emptyhomes-tax-could-raise-tens-of-millions-key-design-choices-still-unresolved","https://secure.pipeline.soar.com/6254777-e2e24bf5910340c0c06ef47487b9185b/orig.mp4?Expires=1771163962&Signature=jCljgF3OK~Tl3cMXV1hWmtQjkdamytzyLbv531322fk3AeBNqbLMD~ZRFyXblXfZWnaofhc9rwmUoR6SLLP1ozGjmyyPWi2Onq2BEuhBbdYQRqn6386OyW3UsQHWrHIUlWZyxpYFgcehAc03-OOk39UCRdaWVF-waeU4xAnWrEXxKOeQgqKcIrbX7LlDGyfq-A4KMNdQ40z2xT4rON76pfH5yKfJx3jlTWNxN4bE6gffwHKIN3v8i6MEVx8AYCUW52ySIs7L7tBAJyWQwFTukM~KF4ju5iLBZnSDV1CUBp8Gn3HkoiX8IVumQRqsDCABmb3lvtOdwUlJuHENLsuXtQ__&Key-Pair-Id=KUT5TJCACFTXG","Honolulu — Consultants for the city told the Council’s Budget Committee that a proposed empty‑homes tax in Bill 46 could generate net revenue for the City and County of Honolulu if the program is implemented as they modeled, but numerous design choices and legal questions remain unresolved.

Mohammed Bhamani, partner at Ernst & Young and the engagement lead, said the firm’s first‑phase feasibility analysis found the tax “appears to be financially feasible in Honolulu across a range of tax‑rate scenarios under Bill 46 as currently written.” He presented estimates for a range of tax rates, compliance scenarios and startup and operating costs, and answered questions from council members and members of the public.

Bhamani and his colleagues walked the committee through how they estimated the tax base (properties with low utility usage), the likely share of empty properties that would be exempt under Bill 46’s 16 exemption categories and the program costs the city would face. The firm modeled a baseline that starts at a 1% tax rate for the first two years and increases to 3% in year three, and a “medium” cost scenario that produced positive net revenue in their 10‑year model.

The study estimated, under the medium scenario, average gross revenue and average net revenue across multi‑year scenarios (EY presented figures using conservative, medium and optimistic vacancy and compliance assumptions). It also estimated one‑time implementation costs in the low‑to‑mid millions and recurring annual operating costs in the multi‑millions. EY’s presentation noted the draft ordinance in Bill 46 would require at least 20% of any tax revenue to be dedicated to an affordable‑housing development account.

Council members pressed EY and city budget staff on several issues: how the tax base is identified, which exemptions are likely to be most commonly claimed, whether the city’s current tax and property‑record systems can support implementation, and the risk of legal challenge. EY said it used water and, where available, electricity usage as a proxy to estimate empty homes, and validated patterns geographically. The firm cautioned that condos and multi‑unit buildings complicate utility‑based identification because some buildings’ water usage is not metered per unit.

Several members of the public urged action; some urged caution. Ross Sokone, a resident testifying in person, urged the council to act, saying “housing affordability has gotten worse like everything else.” Angela Melody Young, testifying for CARES, praised the analysis but warned of privacy concerns: “tapping into people’s water consumption could be a little invasive,” she told the committee, and urged more work with the real‑estate and property‑management industries before the city adopts a program.

Other public speakers described personal situations and asked the council to refine exemptions and procedures so people who have legitimate reasons for keeping a property empty (medical relocation, probate, renovations) are not inadvertently taxed. EY and city staff repeatedly emphasized that exemptions represent a major determinant of revenue and program complexity — EY said three exemption categories (home exemptions A and C and the principal‑resident exemption) account for the majority of expected exemptions in their model.

Budget Director Andrew Quano and EY noted next steps would include a round of detailed program design (task two of the engagement) to define organizational structure, staffing, technology and a compliance and audit program. EY also included budgeted legal fees in their implementation and operating cost estimates because of ongoing litigation over empty‑homes taxes in other jurisdictions; the firm said the San Francisco litigation may take time to produce definitive precedents.

The committee did not vote on Bill 46 during this meeting. Members asked EY to return with more detailed design options, directed staff to analyze whether existing city systems can support the program, and urged extensive public information and education to reduce confusion about declarations, exemptions and compliance requirements. Any future ordinance, if adopted, would require additional implementation planning and legal review before collection.

Ending — Council members said they want more evidence on exemptions, the technical feasibility of implementation using city systems, and an updated legal analysis before moving forward. EY and city staff agreed to return with more detailed recommendations on program design, technology needs and estimated costs; members also emphasized a need for clear public outreach to avoid confusion in a first declaration year.","Ernst & Young told Honolulu’s Budget Committee that a tax on empty homes as written in Bill 46 could be financially feasible, producing net revenue if implementation costs and exemptions are set as assumed. Committee members and residents pressed for clearer exemptions, legal review and public outreach before the council moves ahead.",{"_33":88,"_35":36,"_37":38,"_39":89,"_41":90,"_43":91,"_45":92,"_47":93,"_49":94,"_51":95,"_53":96,"_55":56,"_57":58,"_59":97,"_61":62,"_63":64,"_65":98,"_67":68,"_69":70,"_71":68,"_72":73,"_74":73},6254768,"Council agrees to limit external grants to “up to 50%” as Honolulu sets up climate resiliency fund",87,1290000,1377000,"/Search/View?dp=1&key=3169015-cb0436458bf172bee3fd0980f196da72&start=1290&end=1377","https://assets.pipeline.soar.com/3169015-cb0436458bf172bee3fd0980f196da72/thumbnail_1290000.jpg","/articles/6254768/Honolulu-City/Honolulu-County/Hawaii/Council-agrees-to-limit-external-grants-to-up-to-50-as-Honolulu-sets-up-climate-resiliency-fund","https://secure.pipeline.soar.com/6254768-98685c89c43d03922cf76a7de6a36c47/orig.mp4?Expires=1771163962&Signature=ld8cFjvxbvFnpEtb-2GjOAZj00gNXhspNGOYnanQfRyseUQWYz2FMKLquuhU7rU2hWorcp-Cb85F3Su9U1goD92NYeT4kDcZ5lWajVfgy9mGul4ncvVoSYbiOr5LRGFqVi8OBFpjnfBOytvkxSFh3GB7sTDfV7U6blFRgSVKUxtn9smeMyI~SDcBPcYJVhTk6TwSZOVoArorzz3aW67XCqd5xpruFdMz8WaHC~7l-~kGZsR0hUnLi1Um2ZOIGfcgI1CmfvkHocz3BrR9ZIICZcXDRzHVG9z7dQoMV71-OFfwE~9YQltDjzifaZB~IyxqXGXJOftejycqS18zMqTB2Q__&Key-Pair-Id=KUT5TJCACFTXG","Honolulu — The Budget Committee discussed Bill 15, a proposal to create a dedicated climate‑resiliency fund to support city projects and grants to community partners. The Office of Climate Change, Sustainability and Resilience told the committee it supports a split of funding between internal city projects and external grants and suggested a flexible “up to 50%” cap for outside awards to allow priorities to shift year‑to‑year.

Ben Sullivan, executive director of the city’s Office of Climate Change, Sustainability and Resilience, advised the committee to prioritize “priority 1” cesspools first because state data show only a subset of the island’s cesspools have the highest impact on nearshore water quality. Sullivan said the Department of Environmental Services is continuing work to analyze cesspool interconnections and conversion options and that detailed conversion planning would take time; he therefore urged the council to structure the fund so the city can direct resources quickly to the highest‑priority conversions and other resilience work.

Sullivan told the committee the office originally recommended a 60/40 split (internal city projects vs. external grants); during the meeting staff supported council language that makes the external grants share “up to 50%” of annual appropriations so the city retains flexibility and any unspent share can roll to other resilience priorities. Sullivan also proposed a small administrative set‑aside (the office discussed 5%) for program administration and recommended that the fund be structured so money can be carried over year to year for multi‑year projects.

Committee members discussed scope and timing. Sullivan said the Department of Health data the office reviewed show about 10,000 cesspools on Oahu and roughly 750 that are classified as priority 1, and he recommended early focus on those high‑impact sites. He also said DEP’s detailed interconnection analysis will require about 16 months to complete, so the fund will need to be able to support a staged approach to conversions and sewer connections.

Committee members adopted an oral amendment to the CD2 language to make the grants share an “up to 50%” bucket for external grants and loans, with the remainder available for city‑led resilience projects. The committee did not finalize appropriation amounts at the hearing; members asked the office to return with proposed administrative procedures, eligibility criteria for outside grants, and a sample project list focusing on high‑priority cesspools and other resilience measures.

Ending — The committee moved the measure forward in amended form, asking the Office of Climate Change, Sustainability and Resilience to provide additional operational details (project selection, grant rules, and eligibility thresholds) and to present a plan that can move money quickly to the highest‑priority cesspools while preserving funds for city infrastructure projects.","The council discussed Bill 15 to create a climate resiliency fund. City staff recommended focusing initial investments on highest‑priority cesspools and proposed flexibility in how city and external projects split the fund; council language was amended to allow up to 50% of fund dollars to go to outside grants and loans.","actionData","errors"]

Article not found

Honolulu bond counsel warns rate cuts could breach covenants as council debates phased sewer‑fee increases

Consultants say Honolulu empty‑homes tax could raise tens of millions; key design choices still unresolved

Council agrees to limit external grants to “up to 50%” as Honolulu sets up climate resiliency fund