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Yahoo
6 days ago
- Business
- Yahoo
Honolulu City Council advances sewer fees bill
Mayor Rick Blangiardi administration's proposed 10-year, 115 % sewer fee rate increase that's expected to begin this summer has been countered by the Honolulu City Council. The Council's five-member Budget Committee voted 4-1 Tuesday, with Radiant Cordero dissenting, to approve passage of a committee draft of the city-initiated Bill 60. Budget Committee Chair Tyler Dos Santos-Tam's version of the measure, which shaves the city's decade-long span for increased rates down to about six years, will start Jan. 1, 2026 and run through 2031. Dos Santos-Tam's Bill 60 proposes sewer fee increases for a household that uses about 6, 000-gallons per month—deemed 50 % of all single-family households in Honolulu—equates to a 6 % increase in sewer fees in fiscal year 2026, 7.5 % in fiscal year 2027, 8.5 % in fiscal year 2028, followed by 9 % over the remaining three fiscal years. If adopted, Bill 60 would see a 60 % base charge—a fixed monthly fee—and a 40 % volumetric charge, or fees based on monthly water usage. Currently, city and county sewer bills calculate a 70 % base charge—a fee of $77.55 for all single-family homes—and a 30 % volumetric rate, which is applied equally for every 1, 000 gallons used, the city Department of Environmental Services states. ENV indicates that a household using 6, 000 gallons per month pays $99.77—with the base of $77.55 plus $22.22 for the volumetric rate. Dos Santos-Tam's version of Bill 60 also will align with ENV's 6-year capital improvement projects plan. 'So we can get through a full CIP cycle, ' he added. 'And then we can deal with what happens in the out years thereafter.' Under Dos Santos-Tam's Bill 60, the budget committee voted to allow 'rule-making authority ' for ENV to set up a program called Customer Assistance for Residential Environmental Services, or CARES, to help with 'affordability and equity ' of increased sewer fee rates. Sewer customers who qualify based on household income of less than 80 % area median income will be eligible for a $20 to $25 credit on their monthly base fee. The program will be funded at $10 million per year. Customers will have to apply for the program to prove eligibility and then be re-verified every six months, ENV states. Bill 60 is scheduled to return for a third and final reading before the full Council on June 4. In October, ENV initially proposed to increase sewer fees annually for the next 10 years—by 9 % over the first six years, followed by smaller annual increases of 8 %, 7 %, 6 % and 5 % over the subsequent four years. But by April, ENV Director Roger Babcock presented to the Council's Budget Committee the so-called 6 % option—which sees sewer rates rise by 6 % on July 1. Those rates would increase by 7.5 % in 2027, 8.5 % in 2028, 9 % in the following four years, then rise by 8 %, 7.5 % and 7 % in the final three years, ending in 2035. City officials say proposed sewer fee hikes are necessary to support ongoing wastewater operations and maintenance efforts, as well as a $10.1 billion capital improvement program for Oahu's wastewater collection and treatment system that is planned through 2040. The fee hikes also will fund projects to prepare the city's wastewater infrastructure for climate change and sea-level rise, city officials say. And they assert the work includes a $2.5 billion upgrade to the Sand Island Wastewater Treatment Plant as required under a 2010 federal consent decree. Previously, Council Chair Tommy Waters—who does not sit on the budget committee—offered his version of Bill 60, a 6.75 % increase for the first five years, starting July 1. The initial increases would be followed by an 8.75 % increase for the next two years, then a decrease to 7.75 %, 6.75 % and 5.5 % over the remaining years, 'thereby creating savings, ' Waters said previously, adding instead of a 100 % increase over the decade, 'it would amount to approximately about a 70 % increase over 10 years.' But at Tuesday's hearing, Waters admitted his version of the bill was found to have calculation errors. 'We started from 2012 rather than 2016 … which is the last date that sewer increases took effect, ' he explained. During a presentation, ENV Director Roger Babcock highlighted that Waters' proposed Bill 60 in fiscal year 2026 would provide less revenues—about $397.5 million, a 13 % drop—compared with the city's current revenues of $457.03 million devoted to sewer funding. 'So that's a $60 million decrease, ' Babcock said, 'which would be very problematic for the program.' In contrast, Babcock noted the city's proposed 6 % option would provide $484.4 million in revenue needed to support required sewage system upgrades. Initially stating he'd resubmit a corrected version of his measure, Waters later backed Dos Santos-Tam's draft of Bill 60. Still, Waters noted households using 6, 000 gallons of water or less per month could see their sewer bills rise by over 61 %, from $99.77 per month to $160.85 per month. 'And those using 9, 000 gallons per month, which is the typical user—a family with two kids, a dog, maybe in-laws—that would go up from $110 to $204 ' per month, an over 85 % increase, said Waters. 'I mean that's really what we're voting on.' At the meeting, city Department of Budget and Fiscal Services Director Andy Kawano favored Dos Santos-Tam's measure as 'revenue calculations will meet our required minimums going forward through 10 years.' However, 'there could be an option, if it's more palatable for Council members, to truncate the (10-year ) term to five to seven years, that's possible, ' Kawano claimed. 'If we do that, we would meet our required minimums for every year, for one through five or one through seven, depending on what Council members decide.' Ways to defray the overall cost of the city's wastewater operations also were touched on at the meeting. During public testimony, Frank Doyle, a former city and county ENV director, testified the Council and city should work together to end the 2010 federally-mandated consent decree that included upgrading the island's sewage treatment plants to 'secondary treatment.' Although secondary treatment does not make the water drinkable, it does turn it into recycled water that can be used for things like landscaping, city officials say. 'Since entering the consent decree the city has spent billions of dollars for improvements of our wastewater system, and has essentially completed almost all of the requirements of the decree except for the one, largest project—a $2.5 billion (secondary treatment ) project for Sand Island, ' Doyle said. 'If secondary treatment was required at Sand Island (Wastewater Treatment Plant ) in 2010—because it really holds some significant public health or environmental concern—that project would have been prioritized immediately.' 'Instead, it comes in last, not needed until 2030, ' he said, adding no real public health concern occurred in 2010. 'And there isn't any today.' Doyle requested the Council 'urge the administration to continue to pursue a discussion with EPA ' on the consent decree. 'And if the administration doesn't want to do it, the Council should do it, ' he added. In 2010 the negotiated consent decree included three phases and a 25-year implementation schedule, the city says. According to the U.S. Department of Justice and the U.S. Environmental Protection Agency, the work was meant to reduce the public health risk caused by exposure to pathogens in raw sewage and the amount of harmful pollutants affecting the island's marine environment. At the time, overflows caused millions of gallons of untreated sewage to be discharged into water off Oahu. The city had to pay a total fine of $1.6 million to be split between the federal government and state to resolve violations of the Clean Water Act and Hawaii's water pollution law, the EPA states. Those violating acts included the March 24, 2006, Beachwalk force main break which spilled about 50 million gallons of sewage into the Ala Wai Canal, according to the EPA. For his part, Waters stated 'as a Council, we've asked the administration to discuss with the EPA removing the need for secondary treatment or extending the term of the consent decree.' 'We need to extend the sewer fees, but not for the full 10 years, as requested, ' he added, 'to give us time to work with the EPA and find alternatives to funding the wastewater system.'
Yahoo
27-05-2025
- Business
- Yahoo
Honolulu's proposed 115% hike in sewer fee under review
Mayor Rick Blangiardi administration's proposed 10-year, 115 % sewer fee rate increase that's expected to begin this summer remains under Honolulu City Council scrutiny. The Council's Budget Committee today is scheduled to review aspects of city-initiated Bill 60, which, if approved, will take effect July 1. The measure passed its second of three readings April 16. The city Department of Environmental Services says an average single-family residential sewer bill totals approximately $110.89 a month. By July 1 that bill could rise to $122.04 a month. ENV contends planned sewer fee rate hikes are necessary to address rising operational costs as well as fund critical projects within its $10.1 billion capital improvement program, scheduled for 2025 to 2040. That includes work to upgrade the Sand Island Wastewater Treatment Plant to full secondary treatment, which will cost an estimated $2.5 billion. Potable water fee rates will not be adjusted, as they are separate fees administered by the Honolulu Board of Water Supply. In October, ENV initially proposed to increase sewer fees annually for the next 10 years—by 9 % over the first six years, followed by smaller annual increases of 8 %, 7 %, 6 % and 5 % over the subsequent four years. But since that time other versions to Bill 60 have materialized—including a revision by ENV itself that supposedly lessens the initial blow of higher fees to its rate-paying customers. In April, ENV Director Roger Babcock presented to the Council's Budget Committee the so-called 6 % option—which sees sewer rates rise by 6 % on July 1. Those rates would increase by 7.5 % in 2027, 8.5 % in 2028, 9 % in the following four years, then rise by 8 %, 7.5 % and 7 % in the final three years, ending in 2035. Under this 6 % option, the city said, the same average single-family residential sewer bill in the first year would go to $119.18 a month instead of $122.04, a 2.3 % difference. Babcock said new rates should ensure the city is 'whole, in terms of operations and maintenance, debt service and new debt issued in order to do our (capital improvement program ).' But Council Chair Tommy Waters has said the city's new 6 % option is 'putting the big rate increases at the end of the 10-year cycle, rather than at the beginning.' With regard to Bill 60, Waters' tentative proposal to increase sewer fees annually for the next decade includes a 6.75 % increase for the first five years, starting July 1. The initial increases would be followed by an 8.75 % increase for the next two years, then a decrease to 7.75 %, 6.75 % and 5.5 % over the remaining years, 'thereby creating savings, ' he said. Waters said instead of a 100 % increase over the dec ade, 'it would amount to approximately about a 70 % increase over 10 years.' Legislation related to the city's sewer fund has also materialized. On May 5, Waters introduced Bill 43, meant to redirect a portion of the 3 % visitor-generated Oahu transient accommodations tax, which in part is earmarked for Honolulu's rail project, to the city's sewer fund. Bill 43, as drafted, would temporarily amend the disposition of the city's OTAT revenues so that 50 % would be deposited into the transit fund, while 41.66 % would go into the sewer fund. The legislation also allocates 8.34 % to create a special fund, one to be named by the city Department of Budget and Fiscal Serv ices, to mitigate impacts of visitors on public facilities and natural resources and 'supplement any funds regularly appropriated for that purpose.' If approved, Bill 43 would take effect July 1, 2027, and be repealed June 30, 2037. But critics of Waters' measure—including BFS Director Andy Kawano—say it's not a feasible option for the city to pursue. 'This measure will negatively impact the city's general fund and deviate from the intended purpose of the TAT, which is to provide general fund capacity to fund city services ; mitigate the strain visitors place on public facilities, emergency services, and natural resources ; and provide additional funding for rail (i.e., 'Skyline') construction, ' Kawano wrote in a May 12 letter to Council. Still, Waters previously told the Honolulu Star-Advertiser that 'Bill 43 offers a more strategic and equitable alternative to the administration's proposed 115 % rate hike.' 'By using the Council's existing authority to reallocate a portion of OTAT revenue, Bill 43 reduces pressure on working families, ' he said. 'It ensures that visitors who contribute heavily to the wear and tear on our water and wastewater systems contribute a fair share.' The meeting begins at 9 a.m. inside Council chambers, 530 S. King St.
Yahoo
12-05-2025
- Business
- Yahoo
Bill would offset Honolulu sewer fee hike with money intended for rail
Honolulu City Council Chair Tommy Waters has sponsored legislation to defray costs associated with the city's planned 10-year, 115 % sewer fee rate hike that is slated to start this summer. Bill 43, which was introduced May 5, would redirect a portion of the 3 % visitor-generated Oahu transient accommodations tax, which is earmarked for Honolulu's rail project, to the city's sewer fund. The measure would temporarily amend the disposition of the city's OTAT revenues so that 50 % would be deposited into the transit fund, while 41.66 % would go into the sewer fund. The legislation also allocates 8.34 % to create a special fund, one to be named by the city Department of Budget and Fiscal Services, in order to mitigate impacts of visitors on public facilities and natural resources and 'supplement any funds regularly appropriated for that purpose.' If approved, Bill 43 would take effect July 1, 2027, and be repealed June 30, 2037. The full Council is scheduled to hold a first reading on Bill 43 on Wednesday. Waters told the Honolulu Star-Advertiser, 'Bill 43 offers a more strategic and equitable alternative to the administration's proposed 115 % rate hike. By using the Council's existing authority to reallocate a portion of OTAT revenue, Bill 43 reduces pressure on working families.' He added, 'It ensures that visitors who contribute heavily to the wear and tear on our water and wastewater systems contribute a fair share. This is more than sound fiscal policy ; it is about responsibly utilizing the existing OTAT, which is a practical step towards a more equitable and sustainable future.' In recent months the city Department of Environmental Services has said the planned sewer fee increases—amounting to a total increase of 115 % across all rate-paying classes over a decade—would take effect July 1. Currently, the city says, an average single-family residential sewer bill totals approximately $110.89 a month. By July 1 that bill could rise to $122.04 a month. ENV said that planned sewer fee rate hikes are necessary to address rising operational costs and fund critical projects within its $10.1 billion capital improvement program, scheduled for 2025 to 2040. That includes work to upgrade the Sand Island Wastewater Treatment Plant to full secondary treatment at an estimated cost of $2.5 billion. Potable-water fee rates will not be adjusted, as they are separate fees administered by the Honolulu Board of Water Supply. The proposed sewer rate fee hike is being proposed under city-initiated Bill 60. In October, ENV initially proposed to increase sewer fees annually for the next 10 years—by 9 % over the first six years, followed by four smaller annual increases of 8 %, 7 %, 6 % and 5 %. But since that time other versions of Bill 60 have materialized, including a revision by ENV itself that supposedly lessens the initial blow of higher fees to its rate-paying customers. ENV Director Roger Babcock presented a so-called 6 % option that would see sewer rates rise by 6 % on July 1, during an April 29 Council Budget Committee meeting. Those rates would increase by 7.5 % in 2027, 8.5 % in 2028, 9 % in the following four years, then rise by 8 %, 7.5 % and 7 % in the final three years, ending in the year 2035. Under this 6 % option, the city said the same average single-family residential sewer bill in the first year would go to $119.18 a month instead of $122.04, a 2.3 % difference. 'We were asked if we could do anything to try to modify the rate schedule in order to perhaps reduce rates in the initial years, ' Babcock told the panel. 'The important thing was we took our revenue requirements for the 10-year period, and actually beyond, and made sure that we had enough revenues in each year of the rate package.' He said new rates should ensure the city is 'whole, in terms of operations and maintenance, debt service and new debt issued in order to do our (capital improvement program ).' During committee questions, Waters said the city's new 6 % option is 'putting the big rate increases at the end of the 10-year cycle, rather than at the beginning.' With regard to Bill 60, Waters' tentative proposal to increase sewer fees annually for the next decade includes a 6.75 % increase for the first five years, starting July 1. The initial increases would be followed by an 8.75 % increase for the next two years, then a decrease to 7.75 %, 6.75 % and 5.5 % over the remaining years, 'thereby creating savings, ' he said. Waters said instead of a 100 % increase over the decade, 'it would amount to approximately about a 70 % increase over 10 years.' Waters is not a voting member of the Budget Committee ; however, he said he would 'love for this committee to seriously consider this approach, ' rather than the city's versions of Bill 60. Later, Waters told the committee he had 'a bill already drafted which would infuse the sewer fund using the OTAT, using approximately $49 million a year.' He noted 50 % of OTAT currently funds the city's over-$10 billion rail project. He said by 'using cash from the OTAT, ' the city would not have to issue as many bonds to fund major city projects such as sewer treatment plant upgrades. But not all embrace Waters' use of OTAT funds to cover sewer costs rather than city rail. During public testimony April 29, Natalie Iwasa, a board member of the Honolulu Authority for Rapid Transportation, said such actions might negatively sway bond investors connected to the city's multibillion-dollar upgrades to its sewer treatment infrastructure and related utilities. 'If you are taking cash or you are taking TAT or you are taking any other money that could go to the general fund and using that to supplement the sewer fund, what does that tell investors ?' asked Iwasa, in her individual capacity. 'Investors want to have the assurance that (the city has ) the sewer money here and that they have the general (fund ) money here.' 'And if you're taking from the general money and you're putting it over here, what happens to the general fund ?' she queried. 'Is the bond rating in the future going to go down because of that ?' In response to Bill 43's critics, Waters said, 'I respect those concerns, but the Council must look at the city's broader needs.' 'Rail is important, as is clean water, public health and environmental safety, ' he told the Star-Advertiser. 'The bill is not taking anything away from HART, but we're maximizing how we use visitors' revenue.'
Yahoo
12-05-2025
- Business
- Yahoo
Bill seeks to offset Honolulu's sewer fee hike
Honolulu City Council Chair Tommy Waters has sponsored legislation to defray costs associated with the city's planned 10-year, 115 % sewer fee rate hike that is slated to start this summer. Bill 43, which was introduced May 5, would redirect a portion of the 3 % visitor-generated Oahu transient accommodations tax, which is earmarked for Honolulu's rail project, to the city's sewer fund. The measure would temporarily amend the disposition of the city's OTAT revenues so that 50 % would be deposited into the transit fund, while 41.66 % would go into the sewer fund. The legislation also allocates 8.34 % to create a special fund, one to be named by the city Department of Budget and Fiscal Services, in order to mitigate impacts of visitors on public facilities and natural resources and 'supplement any funds regularly appropriated for that purpose.' If approved, Bill 43 would take effect July 1, 2027, and be repealed June 30, 2037. The full Council is scheduled to hold a first reading on Bill 43 on Wednesday. Waters told the Honolulu Star-Advertiser, 'Bill 43 offers a more strategic and equitable alternative to the administration's proposed 115 % rate hike. By using the Council's existing authority to reallocate a portion of OTAT revenue, Bill 43 reduces pressure on working families.' He added, 'It ensures that visitors who contribute heavily to the wear and tear on our water and wastewater systems contribute a fair share. This is more than sound fiscal policy ; it is about responsibly utilizing the existing OTAT, which is a practical step towards a more equitable and sustainable future.' In recent months the city Department of Environmental Services has said the planned sewer fee increases—amounting to a total increase of 115 % across all rate-paying classes over a decade—would take effect July 1. Currently, the city says, an average single-family residential sewer bill totals approximately $110.89 a month. By July 1 that bill could rise to $122.04 a month. ENV said that planned sewer fee rate hikes are necessary to address rising operational costs and fund critical projects within its $10.1 billion capital improvement program, scheduled for 2025 to 2040. That includes work to upgrade the Sand Island Wastewater Treatment Plant to full secondary treatment at an estimated cost of $2.5 billion. Potable-water fee rates will not be adjusted, as they are separate fees administered by the Honolulu Board of Water Supply. The proposed sewer rate fee hike is being proposed under city-initiated Bill 60. In October, ENV initially proposed to increase sewer fees annually for the next 10 years—by 9 % over the first six years, followed by four smaller annual increases of 8 %, 7 %, 6 % and 5 %. But since that time other versions of Bill 60 have materialized, including a revision by ENV itself that supposedly lessens the initial blow of higher fees to its rate-paying customers. ENV Director Roger Babcock presented a so-called 6 % option that would see sewer rates rise by 6 % on July 1, during an April 29 Council Budget Committee meeting. Those rates would increase by 7.5 % in 2027, 8.5 % in 2028, 9 % in the following four years, then rise by 8 %, 7.5 % and 7 % in the final three years, ending in the year 2035. Under this 6 % option, the city said the same average single-family residential sewer bill in the first year would go to $119.18 a month instead of $122.04, a 2.3 % difference. 'We were asked if we could do anything to try to modify the rate schedule in order to perhaps reduce rates in the initial years, ' Babcock told the panel. 'The important thing was we took our revenue requirements for the 10-year period, and actually beyond, and made sure that we had enough revenues in each year of the rate package.' He said new rates should ensure the city is 'whole, in terms of operations and maintenance, debt service and new debt issued in order to do our (capital improvement program ).' During committee questions, Waters said the city's new 6 % option is 'putting the big rate increases at the end of the 10-year cycle, rather than at the beginning.' With regard to Bill 60, Waters' tentative proposal to increase sewer fees annually for the next decade includes a 6.75 % increase for the first five years, starting July 1. The initial increases would be followed by an 8.75 % increase for the next two years, then a decrease to 7.75 %, 6.75 % and 5.5 % over the remaining years, 'thereby creating savings, ' he said. Waters said instead of a 100 % increase over the decade, 'it would amount to approximately about a 70 % increase over 10 years.' Waters is not a voting member of the Budget Committee ; however, he said he would 'love for this committee to seriously consider this approach, ' rather than the city's versions of Bill 60. Later, Waters told the committee he had 'a bill already drafted which would infuse the sewer fund using the OTAT, using approximately $49 million a year.' He noted 50 % of OTAT currently funds the city's over-$10 billion rail project. He said by 'using cash from the OTAT, ' the city would not have to issue as many bonds to fund major city projects such as sewer treatment plant upgrades. But not all embrace Waters' use of OTAT funds to cover sewer costs rather than city rail. During public testimony April 29, Natalie Iwasa, a board member of the Honolulu Authority for Rapid Transportation, said such actions might negatively sway bond investors connected to the city's multibillion-dollar upgrades to its sewer treatment infrastructure and related utilities. 'If you are taking cash or you are taking TAT or you are taking any other money that could go to the general fund and using that to supplement the sewer fund, what does that tell investors ?' asked Iwasa, in her individual capacity. 'Investors want to have the assurance that (the city has ) the sewer money here and that they have the general (fund ) money here.' 'And if you're taking from the general money and you're putting it over here, what happens to the general fund ?' she queried. 'Is the bond rating in the future going to go down because of that ?' In response to Bill 43's critics, Waters said, 'I respect those concerns, but the Council must look at the city's broader needs.' 'Rail is important, as is clean water, public health and environmental safety, ' he told the Star-Advertiser. 'The bill is not taking anything away from HART, but we're maximizing how we use visitors' revenue.'
Yahoo
01-05-2025
- Business
- Yahoo
City's planned 115% sewer fee hike under Council scrutiny
STAR-ADVERTISER / OCT. 23 The city is looking at options to deal with a proposed 115 % sewer rate fee hike that is supposed to take effect in July. A worker maintains a primary clarifier at the Sand Island Wastewater Treatment Plant. STAR-ADVERTISER / OCT. 23 The city is looking at options to deal with a proposed 115 % sewer rate fee hike that is supposed to take effect in July. A worker maintains a primary clarifier at the Sand Island Wastewater Treatment Plant. To publicly avert what one city official termed 'rate shock, ' Mayor Rick Blan giardi's administration and Hono lulu City Council are now offering competing ideas to deal with proposed city sewer fee rate hikes expected this summer. The city Department of Environmental Services says the planned sewer fee increases—which they say amount to a total increase of 115 % across all rate-paying classes over a 10-year period—would take effect July 1. Currently, the city says, an average single-family residential sewer bill totals approximately $110.89 a month. By July 1 that bill could rise to $122.04 a month. ENV contends planned sewer fee rate hikes are necessary to address rising operational costs as well as fund critical projects within its $10.1 billion capital improvement program, scheduled from 2025 to 2040. That includes work to upgrade the Sand Island Wastewater Treatment Plant to full secondary treatment, which will cost an estimated $2.5 billion. Potable water fee rates will not be adjusted, as they are separate fees administered by the Honolulu Board of Water Supply. Don 't miss out on what 's happening ! Stay in touch with breaking news, as it happens, conveniently in your email inbox. It 's FREE ! Email 28141 Sign Up By clicking to sign up, you agree to Star-Advertiser 's and Google 's and. This form is protected by reCAPTCHA. In October, ENV initially proposed to increase sewer fees annually for the next 10 years—by 9 % over the first six years, followed by smaller annual increases of 8 %, 7 %, 6 %, and 5 % over the subsequent four years. But since that time, other versions to Bill 60 have materialized—including a revision by ENV itself that supposedly lessens the initial blow of higher fees to its rate-paying customers. ENV Director Roger Babcock on Tuesday presented to the Council's Budget Committee the so-called '6 % option '—which sees sewer rates rise by 6 % on July 1. Those rates would increase by 7.5 % in 2027 ; 8.5 % in 2028 ; 9 % in the following four years ; then rise by 8 %, 7.5 % and 7 % in the final three years, ending at year 2035. Under this 6 % option, the city said the same average single-family residential sewer bill in the first year would go to $119.18 a month instead of $122.04, a 2.3 % difference. 'We were asked if we could do anything to try to modify the rate schedule in order to perhaps reduce rates in the initial years, ' Babcock told the panel. 'The important thing was we took our revenue requirements for the 10-year period, and actually beyond, and made sure that we had enough revenues in each year of the rate package.' He noted new rates should ensure the city is 'whole, in terms of operations and maintenance, debt service and new debt issued in order to do our (capital improvement program ).' During committee questions, Council Chair Tommy Waters noted ENV's new 6 % option 'starts at 6 %, but over the years, will increase up to 9 %, right ?' 'Correct, ' Babcock replied. Waters added, 'And ultimately, they both come out with approximately the same amount, which is about a 100 % increase, right ?' 'That's correct, yes, ' said Babcock. 'Because it's all based on the revenue requirements that we generated during our rate study.' But Waters asserted the city's new 6 % option is 'putting the big rate increases at the end of the 10-year cycle, rather than at the beginning.' Babcock said, 'It redistributes some of the increase from the earlier years—really the first three years only—(and ) moving that out a little bit to the later years.' Meantime, Waters told the committee 'we understand the reality that families are facing.' 'Food costs are up, transportation costs are up, utilities and electric bills are up, ' he said. 'One of the things that I'm suggesting, and I have a bill already drafted, which would infuse the sewer fund using the Oahu Transient Accommodations Tax, or OTAT, using approximately $49 million a year.' Waters noted 50 % of OTAT currently funds the city's over-$10 billion rail project. 'This is a tax on the visitors, whenever they come to Hawaii, ' he said, adding 8.4 % of OTAT goes toward city parks to mitigate impacts of visitors too. 'I'm suggesting we take the balance of 41.66 % and infuse it into the general fund.' Waters claimed by 'using cash from the OTAT ' the city won't have to issue as many bonds to fund major city projects like sewer treatment plant upgrades. 'Thereby, creating savings, ' he said. And rather than 'a 100 % increase over the 10 years, it would amount to approximately about a 70 % increase over 10 years, ' he added. Waters' tentative proposal to increase sewer fees annually for the next decade includes a 6.75 % increase for the first five years starting July 1, followed by an 8.75 % increase for the next two years, and then it would decrease to 7.75 %, 6.75 %, and 5.5 % over the remaining years. Although not a voting member of the Council's Budget Committee, Waters said, 'he'd love for this committee to seriously consider this approach, rather than ' the city's versions of Bill 60. Earlier in the meeting, the city's bond counsel spoke to the importance of Honolulu maintaining its strong bond rating—currently AA +—as the city tackles multibillion dollar upgrades to its sewer treatment infrastructure and related utilities. 'As you may know, the city has approximately $2.5 billion in aggregate principal amount of wastewater bonds outstanding, which are designed to finance improvements for the city's waste-water system, ' said John Wang, a partner with San Francisco-based law firm Orrick, Herrington &Sutcliffe LLP. He asserted current bond covenants 'or promises '—first established in 1998—commit the city and ENV to do 'certain things, while those bonds are held by investors.' 'These promises collectively form a legally binding contract with the city's existing and future bondholders, ' Wang said. 'These promises, of course, include the promise to pay bonds on time and in scheduled amounts but also include other important commitments.' He said that includes the 'rate covenant, which requires the city to set sewer rates at sufficient levels to generate revenues to allow the city to cover its (operating and maintenance ) expenses as well as its obligations to make debt service payment on the bonds, plus a certain cushion.' Wang added 'unfortunately, monies generated from the surplus and the city's general fund or any other monies derived from the general fund do not legally qualify as monies to meet this requirement.' He noted investors use bond ratings 'to help determine whether to buy bonds, and if purchased, at what interest rate.' 'The higher the rating on the bonds, the lower the borrowing costs, ' he said. 'And in turn, the lower the rating on the bonds, the higher the borrowing costs.' However, he asserted 'failure to meet the rate covenant could expose the city to legal risks.' 'If the city were not to enact sewer rates, and charges sufficient to meet the rate covenant, such failure could lead to a default under the resolutions and entitle bondholders to pursue legal remedies against the city, including declaring that all outstanding bonds to be immediately due or payable, ' Wang asserted. 'And the net effect of the city's borrowing costs could end up costing ratepayers more in the long run, ' he added. During public testimony Tuesday, Hawaii Kai resident Natalie Iwasa disagreed with Waters' plan to use OTAT funds to cover sewer costs rather than city rail, as she suggested such actions might sway bond investors. 'If you are taking cash, or you are taking TAT or you are taking any other money that could go to the general fund and using that to supplement the sewer fund, what does that tell investors ?' she asked. 'Investors want to have the assurance that (the city has ) the sewer money here, and that they have the general (fund ) money here.' 'And if you're taking from the general money and you're putting it over here, what happens to the general fund ?' she queried. 'Is the bond rating in the future going to go down because of that ?' Kaneohe resident Donald Sakamoto also expressed concerns over higher sewer fees. 'As a 'Go for broke' guy, I don't want to be too broke to 'Go for broke' anymore, ' he said. 'Fee increases are very hard for myself, who is disabled and a kupuna.' In the end, Budget Committee Chair Tyler Dos Santos-Tam—who'd offered his own version of Bill 60—recommended the budget committee postpone discussion on this measure to a time to be determined. However, the panel plans to deliberate the matter further at meetings in May. The full Council's overall budget sessions for fiscal year 2026—in which a finalized Bill 60 is likely to be included—are scheduled to continue through early June.
