Council OKs expanded authorization to pursue low‑interest SRF loans for Hilo wastewater work

The Hawaii County Council on April 16 approved on first reading an increase in the county's borrowing authorization to allow the county to pursue State Revolving Fund (SRF) loans for the Hilo Wastewater Treatment Plant rehabilitation. The measure, Bill 43 (first reading), raises the maximum authorization tied to the project from $17 million to $52 million.

County finance and environmental managers said the change would let the county replace higher‑cost general obligation borrowing with low‑interest SRF loans if those funds are available. "These loans are low interestabout a quarter percent per year," Finance Director Diane Nakagawa told the council, adding that the SRF program also carries a separate loan fee. Robin Baumann, business manager for Environmental Management, said the state currently estimates roughly $26.7 million in SRF funds could be available this year and that the county is seeking to be ready to accept more if other counties cannot use their allocations.

Council members pressed for clarity on how the funding changes affect the county's overall financing plans. "What this is doing is increasing the appropriation for the SRF funding and would allow us to eventually decrease some of the funding necessary for the GO bonds," Nakagawa said in response to questions. Councilmember KaniKleinfelder, who presented the item to the full council, said the measure was waived from committee to expedite the county's ability to secure lower‑cost financing.

Why it matters: SRF loans at roughly 0.25% interest would be substantially cheaper than the roughly 4% rate the council discussed for general obligation borrowing; council members said the move could reduce long‑term debt service costs if the SRF funds are obtained. Staff said the increase to $52 million is an authorization that allows the county to accept additional SRF money should it become available; if SRF funds are used, the county's need for GO bond proceeds on this project would decline and the freed bond capacity could be used for other wastewater needs.

Council discussion also identified next steps: staff agreed to provide follow‑up figures that compare the savings at the currently estimated SRF amount (about $26.7 million) and at the higher $52 million authorization so members could see the potential debt service savings. The council voted 9‑0 to approve Bill 43 at first reading.

The measure authorizes the mayor to enter intergovernmental agreements necessary to accept SRF loans and adjusts the county's bond authorization backing to allow the loan agreements to proceed. Council members said they expect project design and loan paperwork to continue and that additional approvals or allocations may follow as specific loan amounts and terms are finalized.

Provenance: The council introduced and discussed Bill 43 beginning with the item explanation and staff presentation on SRF loan availability (transcript excerpt: "bill 43 amends ordinance number 23 40 ... increases the amount of funds for the Hilo wastewater treatment plant rehabilitation project from $17,000,000 to $52,000,000"). The first‑reading vote and announcement that "Bill 43 is approved at first reading" concluded the item later in the meeting.

Ending: The first reading clears the way for the administration to pursue SRF funding and for the council to consider subsequent steps; staff and departmental leaders said they will return with more detailed cost comparisons and updates on SRF availability.