SECTION 1. The legislature finds that Hawaii leads the nation in the creation of pioneering models of energy and infrastructure financing to save money for taxpayers. In 2013, the legislature established the green energy market securitization program, which uses private investment dollars to pay for the upfront costs of energy infrastructure retrofits for both public and private purposes, which are paid back using the savings realized from the reduction in energy costs generated by the new energy-efficient infrastructure while also producing an additional net savings to the end user.

The legislature further finds that by combining private investment capital in pioneering energy financing programs, such as the green energy market securitization program, with long-term commitments to reduce energy use in public facilities, aggregate energy savings can be used over time to pay for sorely needed public facility upgrades at a fraction of their usual cost to taxpayers and can save significant amounts of money annually by eliminating costly electric bills.

The legislature finds that the University of Hawaii at Manoa has a $34,900,000 annual electric bill. Together with the rest of the University of Hawaii system, the energy expenses for university facilities exceed $40,000,000 per year. These rising costs are borne by taxpayers and tuition-paying students.

Furthermore, the legislature finds that the University of Hawaii system has many crumbling facilities and a deferred maintenance backlog that is estimated to cost hundreds of millions of dollars to clear and that is currently unable to be reduced in the near future given current limitations on the availability of state funding.

The legislature finds that energy efficiency and generation projects save money. However, the financial aggregation of energy efficiency and deferred maintenance projects can together save even more money and allow the State to reduce energy costs, address the backlog of deferred maintenance, and prevent further energy-related tuition increases.

The purpose of this Act is to establish the University of Hawaii net-zero initiative with the long-term goals of reducing energy consumption and energy bills to zero, preventing energy-related tuition increases, aggregating energy efficiency and deferred maintenance projects to save capital improvement funding, upgrading the infrastructure of the University of Hawaii system, and using the energy savings to retrofit additional infrastructure and provide student scholarships.

SECTION 2. Chapter 304A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§304A-A University of Hawaii net-zero initiative. (a) This Act shall be known as the University of Hawaii net-zero initiative.

(b) The University of Hawaii shall establish a goal of becoming net-zero with respect to energy use, producing as much renewable energy as the system consumes across all campuses by January 1, 2035.

(c) The University of Hawaii shall establish a benchmark for the amount and value of energy consumed during the 2014-2015 fiscal year, against which it shall measure its progress toward the goal set forth in subsection (b)."

SECTION 3. Chapter 304A, Hawaii Revised Statutes, is amended by adding a new section to part V to be appropriately designated and to read as follows:

"§304A-B University of Hawaii net-zero special fund. (a) There is established the University of Hawaii net-zero special fund, into which shall be deposited:

(1) Appropriations from the legislature;

(2) Moneys from the University of Hawaii, pursuant to subsection (c); and

(3) Moneys from other sources.

(b) The special fund:

(1) Shall be used for capital improvement projects that advance the goal set forth in section 304A-A;

(2) May be used in conjunction with:

(A) Funding as approved through a green infrastructure loan program order, pursuant to section 269-171; or

(B) Comparably lower-priced financing mechanisms to pay for facility upgrades that advance the goal set forth in section 304A-A and meet the requirements of subsection (c);

provided that such financing shall not result in debt service that exceeds energy savings funded by this section; and

(3) Shall be used by the University of Hawaii to provide scholarships to students with the greatest demonstrated financial need, as set forth in subsection (c)(1).

(c) For each capital improvement project funded through the special fund, the University of Hawaii shall annually deposit into the special fund the current value of the energy saved by the project during the preceding fiscal year, as measured against the current value of the energy consumed during the fiscal year prior to the execution of the project, excluding any debt service costs for the project. Funds shall be deposited annually pursuant to this section until the debt service costs for the project have been paid in full; provided that:

(1) Fifty per cent of all moneys deposited into the special fund pursuant to this subsection shall be used annually to provide scholarships to students with the greatest demonstrated financial need; and

(2) Fifty per cent of all moneys deposited into the special fund pursuant to this subsection may be used for new projects that meet the criteria under subsection (b).

(d) The University of Hawaii shall submit a report to the legislature by November 30 of each year that includes but is not limited to the following information:

(1) The balance, deposits, and expenditures in the special fund;

(2) The detailed status of each capital improvement project funded through the special fund, if the project is not yet complete;

(3) The energy savings and costs for each project funded through the special fund to date; and

(4) Recommendations for the next phase of projects to be funded through the special fund.

(e) As used in this section, "special fund" means the University of Hawaii net-zero special fund."

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $45,500,000 or so much thereof as may be necessary for fiscal year 2015-2016 and the same sum or so much thereof as may be necessary for fiscal year 2016-2017 into the University of Hawaii net-zero special fund.

SECTION 5. As a first step toward the University of Hawaii's net-zero goal as set forth in section 304A-A, Hawaii Revised Statutes, there is appropriated out of the University of Hawaii net-zero special fund the sum of $45,500,000 or so much thereof as may be necessary for fiscal year 2015-2016 for the following purposes:

(1) University of Hawaii at Manoa:

(A) $30,000,000 for plans, design, construction, and equipment for the retrofit of Kuykendall hall; provided that the remainder, or so much thereof as may be necessary to complete the $40,000,000 retrofit project for Kuykendall hall, shall be funded through section 304A-B(b)(2)(A), Hawaii Revised Statutes; and

(B) $6,000,000 for plans, design, construction, and equipment for the retrofit of Klum gym, with new athletics-support functions; provided that the remainder, or so much thereof as may be necessary to complete the $8,000,000 retrofit project for Klum gym, shall be funded through section 304A-B(b)(2)(A), Hawaii Revised Statutes.

(2) University of Hawaii at Hilo:

(A) $6,000,000 for plans, design, construction, and equipment for the retrofit of the learning resources center and central plant; provided that the remainder, or so much thereof as may be necessary to complete the $8,000,000 retrofit project for the learning resources center and central plant, shall be funded through section 304A-B(b)(2)(A), Hawaii Revised Statutes; and

(B) $3,500,000 for plans, design, construction, and equipment for the retrofit of the university classroom building; provided that the remainder, or so much thereof as may be necessary to complete the $4,500,000 retrofit project for the university classroom building, shall be funded through section 304A-B(b)(2)(A), Hawaii Revised Statutes.

The sums appropriated shall be expended by the University of Hawaii for the purposes of this Act.

SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $150,000 or so much thereof as may be necessary for fiscal year 2015-2016 and the same sum or so much thereof as may be necessary for fiscal year 2016-2017 to fund two positions within the University of Hawaii system to provide the necessary financial, technical, and other support to advance the goal set forth in section 304A-A, Hawaii Revised Statutes.

The sums appropriated shall be expended by the University of Hawaii for the purposes of this Act.

SECTION 7. In codifying the new sections added by sections 2, 3, and 5 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 8. New statutory material is underscored.

SECTION 9. This Act shall take effect on July 1, 2015.

HOUSE OF REPRESENTATIVES	H.B. NO.	1509
TWENTY-EIGHTH LEGISLATURE, 2015		H.D. 1
STATE OF HAWAII		PROPOSED