Council Member Tupelo appointed to sewer funding committee amid bond rating concerns

The City Council of Honolulu convened on May 30, 2025, to discuss critical financial matters concerning the sewer fund and its sustainability. A significant focus of the meeting was the prohibition against transferring funds from the general fund to cover operational and maintenance costs, debt service, and cash reserves for the sewer fund. The Director emphasized that such reallocations could violate existing bond covenants and threaten the city's high bond rating, which has been maintained through decades of responsible financial management.

The Director strongly opposed any bill that would allow for the use of general funds for sewer improvements, arguing that it would undermine the financial integrity of the sewer fund and potentially lead to a downgrade in the city's bond rating. This downgrade could result in increased debt service costs, impacting the city's financial stability.

Council Member Tupelo raised the possibility of exploring the Water Infrastructure Finance and Innovation Act (WIFIA) program as an alternative funding source. However, the Director noted that they had not yet investigated interest rates for this program. The discussion also touched on the implications of a proposed rebate program funded by the sewer fund, which was clarified to be a direct reduction of revenue rather than a threat to the bond rating.

Another topic of concern was the establishment of a climate resiliency fund, which has been legally set up to support water efficiency initiatives. While the fund's creation was deemed legal, concerns were raised about the potential loss of budget flexibility due to earmarking funds for specific purposes.

The meeting concluded with a consensus on the need for responsible financial practices to protect the city's credit rating while exploring alternative avenues to mitigate the financial burden on residents. The council members acknowledged the importance of maintaining the sewer fund's self-sustainability and the challenges posed by ongoing financial commitments.