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HomeMy WebLinkAboutAgenda Item V.2_2026-05 Draft State CWSRF Intended Use PlanDRAFT State of Hawaiʻi Water Pollution Control Revolving Fund also known as the Clean Water State Revolving Fund (CWSRF) Intended Use Plan for State Fiscal Year (SFY) 2027 and Federal Fiscal Year (FFY) 2026 Appropriation Submitted to the U.S. Environmental Protection Agency (EPA) Region IX Prepared by the State of Hawaiʻi Department of Health Environmental Management Division Wastewater Branch May 2026 DRAFT 2 Table of Contents I. Introduction ..................................................................................................................................... 3 II. FFY 2026 Project Funding Requirements and Project Selection ...................................................... 3 III. Long-Term and Short-Term Goals .................................................................................................. 10 IV. Project Eligibility and Selection ...................................................................................................... 11 V. Loan Policies ................................................................................................................................... 12 VI. Financial Management .................................................................................................................. 13 VII. Other Requirements of the Act...................................................................................................... 14 Appendix A – CWSRF Project Ranking Criteria ............................................................................................ 16 Appendix B – Hawai‘i – Project Priority List for SFY 2027 ........................................................................... 19 Appendix C – Summary of Public Comments .............................................................................................. 22 Table of Tables Table 1: CWSRF Projects to be Funded in SFY 2027 ..................................................................................... 9 Table 2: Long-Term Goals ........................................................................................................................... 10 Table 3: Short-Term Goals .......................................................................................................................... 10 Table 4: Project Eligible for CWSRF Funding ............................................................................................... 12 Table 5: Sources and Uses of SFY 2027 Funds ............................................................................................ 13 Table 6: Capitalization Grant Payments and Disbursements for FFY 2026 ................................................ 14 Table 7: Status of Additional Subsidies for Closed Grants .......................................................................... 14 Table of Figures Figure 1: Proposed Project for SRF Funding Form (Form D-1) .................................................................... 18 DRAFT 3 I. Introduction Hawaiʻi’s Water Pollution Control Revolving Fund (commonly referred to as the Clean Water State Revolving Fund or CWSRF) provides low-interest loans to Hawaiʻi’s four (4) counties to construct high- priority wastewater, stormwater, and non-point source projects. Since its establishment in 1988, the program has issued over $1.416 billion in low-interest loans, providing significant savings in interest costs to the counties. Each year, the CWSRF Program is required to prepare an Intended Use Plan (IUP) as part of its request to the EPA for an annual capitalization grant. The IUP sets program goals, identifies the intended use of federal and state funds to be provided during the year, and describes how the program will meet the requirements of the Federal Fiscal Year (FFY) 2026 Appropriations Act. On November 15, 2021, President Biden signed the Bipartisan Infrastructure Law (BIL) (P.L. 117-58), also known as the Infrastructure Investment and Jobs Act (IIJA) of 2021. The BIL appropriates funds to be administered through the existing CWSRF program from FFY 2022 through 2026 and to be utilized from SFY 2023 through 2027. There are two (2) appropriations per year for the CWSRF (i.e., BIL CWSRF General Supplemental appropriation and BIL CWSRF Emerging Contaminants (EC) Supplemental appropriation). II. FFY 2026 Project Funding Requirements and Project Selection Hawaiʻi is expected to receive a federal capitalization grant of $5,532,000.00 under the FFY 2026 Base CWSRF Appropriations Act and $20,726,000.00 under the FFY 2026 BIL CWSRF Appropriations Act (i.e., $19,079,000.00 for BIL CWSRF General Supplemental and $1,647,000.00 BIL CWSRF EC Supplemental). The following requirements apply: 1. American Iron and Steel (AIS): Funds made available from the CWSRF may not be used for a project for the construction, alteration, maintenance, or repair of treatment works unless all the iron and steel products used in the project are produced in the United States. EPA provides AIS national waivers, including the use of a De Minimis waiver for projects. 2. Fiscal Sustainability Plan (FSP): For applicable CWSRF projects involving repair, replacement, or expansion of publicly owned treatment works, the recipient of a loan shall develop and implement an FSP or certify that the recipient has developed and implemented an FSP that includes: • an introduction indicating whom the document is prepared for and stating the purpose of the document; • an asset inventory of critical assets that are a part of the treatment works, which includes, but is not limited to: i. type of asset; ii. installation date; iii. asset condition; iv. estimated useful remaining life; v. service history; DRAFT 4 • an evaluation of the condition and performance of inventoried assets or asset groupings; • a certification that the recipient has evaluated and will be implementing water and energy conservation efforts as part of the plan; and • a fiscal plan for maintaining, repairing, and, as necessary, replacing the treatment works and a plan for funding such activities. 3. Cost and Effectiveness Analysis: For applicable CWSRF projects, the recipient of a loan shall certify that the recipient: • has studied and evaluated the cost and effectiveness of the processes, materials, techniques, and technologies for carrying out the proposed project or activity for which assistance is sought under this title; and • has selected, to the maximum extent practicable, a project or activity that maximizes the potential for efficient water use, reuse, recapture, and conservation, and energy conservation, taking into account: i. the cost of constructing the project or activity; ii. the cost of operating and maintaining the project or activity over the life of the project or activity; and iii. the cost of replacing the project or activity. 4. Green Project Reserve (GPR): To the extent that there are sufficient eligible project applications, not less than 10% of the capitalization grant shall be used by the state for projects to address green infrastructure, water or energy efficiency improvements, or other environmentally innovative activities. Various minimum amounts are to be allocated to the GPR. Table 1 shows how this requirement will be met. • Base CWSRF GPR: i. During SFY 2027, the plan is to assign the FFY 2026 GPR amount, estimated to be $553,200.00, to C150054-53 Lahaina Recycled Water Force Main Construction/Rehabilitation. • BIL CWSRF General Supplemental GPR: i. During SFY 2027, the plan is to assign the FFY 2026 GPR amount, estimated to be $1,907,900.00, to C150051-82 Honouliuli WWTP Phase 1C - Headworks, HRBC, Solids Process and Misc. Improvements (SLA3). • BIL CWSRF EC GPR: i. During SFY 2027, the plan is to assign the FFY 2026 GPR amount, estimated to be $164,700.00, to C150051-82 Honouliuli WWTP Phase 1C - Headworks, HRBC, Solids Process and Misc. Improvements (SLA3). 5. Additional Subsidization: • Base CWSRF Additional Subsidization: DRAFT 5 Under the Base CWSRF additional subsidy provision, two distinct and additive subsidy authorities are included in the grant: i. Congressional Additional Subsidy Authority: Per congressional authority, the Hawaiʻi CWSRF program must provide 10% of the Base CWSRF capitalization grant as additional subsidization to any CWSRF-eligible recipient. For the FFY 2026 Base CWSRF appropriation, the program plans to allocate 10%, a total of $553,200.00, as additional subsidization to C150055-08 Wailua WWTP Improvements Phase II. ii. Clean Water Act (CWA) Additional Subsidy Authority: Per the CWA, the Hawai‘i CWSRF program is mandated to use at least 10%, but no more than 30%, of the capitalization grant to provide additional subsidization to eligible CWSRF assistance recipients and project types as described in section 603(i) of the CWA. For the FFY 2026 Base CWSRF appropriation, the program plans to allocate 10%, a total of $553,200.00, as additional subsidization to C150054-53 Lahaina Recycled Water Force Main Construction/Rehabilitation. • BIL CWSRF General Supplemental Additional Subsidization: In accordance with BIL, the Hawai‘i CWSRF program is mandated to provide 49% of the FFY 2026 BIL CWSRF General Supplemental capitalization grant as additional subsidization to eligible CWSRF assistance recipients and project types as described in section 603(i) of the CWA. For the FFY 2026 BIL CWSRF General Supplemental appropriation, the program plans to allocate 49%, a total of $9,348,710.00, as additional subsidization to the following projects: i. $2,963,104.00 to C150054-53 Lahaina Recycled Water Force Main Construction/Rehabilitation ii. $3,516,303.00 to C150062-53 Hilo WWTP Rehabilitation and Replacement Project Phase I (SLA2) iii. $1,869,303.00 to C150051-82 Honouliuli WWTP Phase 1C - Headworks, HRBC, Solids Process and Misc. Improvements (SLA3) iv. $1,000,000.00 to RCC00KA-03 County of Kauai Residential Cesspool Conversion Program 3 • BIL CWSRF EC Additional Subsidization: In accordance with BIL, the Hawaiʻi CWSRF program is mandated to provide 100% of the FFY 2026 BIL CWSRF EC capitalization grant as additional subsidization to any eligible CWSRF assistance recipient for any project eligible under section 603(c) of the CWA that addresses emerging contaminants. For the FFY 2026 BIL CWSRF EC, the program plans to allocate 100%, a total of $1,647,000.00, as additional subsidization to C150051-82 Honouliuli WWTP Phase 1C - Headworks, HRBC, Solids Process and Misc. Improvements (SLA3). DRAFT 6 6. Davis-Bacon: The Davis-Bacon Act shall apply to any construction of treatment works carried out in whole or in part with assistance made available by the CWSRF. The Hawaiʻi CWSRF Program will continue to implement Davis-Bacon requirements with the exception provided by the Class Deviation - Prevailing Wage Interview Requirement in Clean Water and Drinking Water State Revolving Funds (CWSRF and DWSRF) Capitalization Grants memorandum of November 16, 2012. This waives the requirement for wage interviews to be conducted within the first two weeks of the start of construction. 7. Reporting: The Hawaiʻi CWSRF Program will continue its quarterly reporting in the EPA Office of Water State Revolving Fund (OWSRF) data system (formerly CWSRF Benefits Reporting (CBR) system) for all CWSRF Base and BIL projects. Reporting will be done on GPR, Federal Funding Accountability and Transparency Act (FFATA) requirements, and environmental benefits from new projects per the EPA Order on Environmental Benefits. This information will also be included in the Annual Report, as well as the "two-pager" reports on environmental benefits. 8. Cash Draw Ratio: As of November 18, 2022, the Hawaiʻi CWSRF program is no longer required to comply with the cash draw rules in the CWSRF regulations at 40 CFR 35.3155(d)(5)(i) and (ii) and 40 CFR 35.3160(b)(2)-(4). The CWSRF will deposit state match funds (or an equivalent amount of non-federal funds) prior to drawing any funds from the federal capitalization grant. The CWSRF may draw funds from the capitalization grant at a ratio of 100% of the disbursement amount. 9. Other Federal Requirements: Other federal requirements apply in an amount equal to the capitalization grant. These requirements are: • Single audit Act (OMB 2 CFR 200, Subpart F) • Disadvantaged Business Enterprise (DBE) compliance • Federal environmental cross-cutting authorities • Equivalency: CWSRF projects specifically identified by the Hawaiʻi CWSRF program that total an amount at least equal to the capitalization grant from the EPA and comply with all the federal requirements. Potential equivalency projects for FFY 2026 are identified in Table 1. All Base CWSRF, BIL CWSRF General Supplemental, and BIL CWSRF EC capitalization grants must meet the equivalency requirements separately. • Blending Funds and Cash Draws: States have the flexibility to craft single assistance agreements (e.g., loans) that contain multiple types of construction components and activities. These assistance agreements may commit funds from multiple BIL capitalization grants and base program funds. Upon disbursement of funds, these assistance agreements may draw from both BIL and base SRF capitalization grants for eligible project components. BIL and base funds must be separately managed and tracked for accounting purposes. States are encouraged to draw BIL funds first when projects are funded with both BIL and base funds. 10. Disadvantaged Communities: Congress has requested that states direct subsidies to disadvantaged communities. In the past, the CWSRF has funded projects such as the closure of large-capacity cesspools servicing relatively low-income or sparsely populated areas and will continue to do so. The BIL was designed to rebuild America’s infrastructure and invest in disadvantaged communities. The Hawai‘i CWSRF will review, refine, and improve its affordability criteria and definition of “disadvantaged communities” as necessary. DRAFT 7 11. Affordability Criteria: The Hawai‘i CWSRF program established its affordability criteria on September 30, 2015, and revised it on October 13, 2021. The affordability analysis included the applicant’s income, unemployment data, population trends, and other data determined relevant by the Hawai‘i CWSRF program. The affordability criteria will neither singly determine nor guarantee whether the Hawai‘i CWSRF program will enter into a binding commitment for additional subsidization with an applicant. 12. Signage: • From the FFY 2015 SRF base capitalization grant and each year thereafter, the Hawai‘i CWSRF program must comply with EPA’s Guidelines for Enhancing Public Awareness of SRF Assistance Agreements (also known as “SRF Signage Guidelines”) in order to enhance public awareness of EPA assistance agreements nationwide. The Hawaiʻi CWSRF program will ensure compliance with EPA’s Signage policy is met for SFY 2027 by implementing the method which best balances the following two (2) goals: i. The sign will satisfy the overall objective of communicating the EPA’s role in funding assistance agreements that achieve positive benefits. ii. The implementation method should be practically and financially viable for states and communities and avoid any overly burdensome investment of time and resources. iii. Signage requirements will be considered an equivalency requirement for SRF programs and will not be required to apply to all SRF projects. The guidelines provide the following options as acceptable: A. Standard signage B. Posters, wall signage, or brochures in a public building or location C. Newspaper/periodical advertisement or press release for project construction, groundbreaking ceremony, or operation of the new or improved facility D. Online signage placed on a community website or a social media outlet 13. Architectural and Engineering (A/E) Services Procurement: In accordance with the Attorney General’s certification letter dated March 21, 2022, which certifies that using Hawaiʻi Revised Statutes Chapter 103D - The State of Hawai‘i Public Procurement Code is equivalent to 40 USC 1101 et seq., the Hawaiʻi CWSRF program may fund A/E projects that receive the capitalization grants, provided that our capitalization grant application for SFY 2027 includes the certification. 14. The Hawai‘i CWSRF Program’s definition of a Treatment Works is the following: Treatment works mean any treatment unit and its associated collection system and disposal system, excluding non-point source and individual wastewater systems. Treatment unit means any plant, facility, or equipment used in the treatment of wastewater, including the necessary pumps, power equipment, blowers, motors, holding tanks, flow splitter, and other process equipment. Projects that do not fall under this definition are not required to comply with the following: • Hawai‘i State Environmental Review Process (SERP), which includes: DRAFT 8 i. the environmental decision document (e.g. prior decision document, exempt project declaration, environmental assessment, or environmental impact statement); ii. the eighteen (18) environmental cross-cutting authorities such as the consultation process under Section 106 of the National Historic Preservation Act, Section 7 of the Endangered Species Act, etc. • AIS requirement, • Davis-Bacon requirement, and • Fiscal Sustainability Plan. 15. Build America, Buy America Act (BABAA): The BIL creates the BABAA domestic sourcing requirements for federal financial assistance programs for infrastructure, including the SRF programs. The BABAA requires that, no later than May 14, 2022, none of the funds made available for a federal financial assistance program for infrastructure may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States. These requirements are for projects identified as using funds “directly made available by” a capitalization grant (i.e. equivalency projects), as applicable. 16. Sewer Overflow and Stormwater Reuse Municipal Grants Program: America’s Water Infrastructure Act of 2018 amended section 221 of the Federal Water Pollution Control Act (FWPCA, a.k.a. the “Clean Water Act”, “CWA”) to reauthorize the Sewer Overflow and Stormwater Reuse Municipal Grants Program (a.k.a. the “Overflow and Stormwater Grant program” or “OSG program”), which authorizes EPA to award grants to states to assist communities in meeting combined sewer overflows (CSO), sanitary sewer overflows (SSO), and stormwater management infrastructure needs. In selecting from among municipalities applying for OSG grants, a state shall give priority to an applicant that is requesting a grant for a project that is on a state’s IUP pursuant to section 606(c). 17. Section 603(c)(2-3) of the FWPCA: Section 319 and 320: The Projects funded under Sections 319 and 320 must support the implementation of a current EPA-approved state nonpoint source management plan and a comprehensive conservation and management plan, respectively. The following project(s) meet these criteria and are identified for funding under these authorities: • RCC00KA-03 County of Kauai Residential Cesspool Conversion Program 3 18. Federal Civil Rights Responsibilities, Including Title VI of the Civil Rights Act of 1964: The EPA has a responsibility to ensure that recipients and sub-recipients of federal financial assistance from the EPA comply with federal civil rights laws that prohibit discrimination on the basis of race, color, national origin (including limited English proficiency), disability, sex, and age, including Title VI of the Civil Rights Act of 1964. The EPA expects the state to review program activities to ensure compliance with Title VI of the Civil Rights Act of 1964. The CWSRF program affirms its review and commitment to Title VI requirements in IUPs and that financial agreements and contracts include appropriate Title VI nondiscrimination language. 19. CWSRF 2% Technical Assistance (TA): The BIL amends the CWA to include section 603(k), which allows States to use up to an amount equal to 2% of their annual capitalization grant awards received after November 15, 2021, to provide TA to rural, small, and tribal publicly owned DRAFT 9 treatment works. The Hawaiʻi CWSRF program reserves the authority to utilize any unused portion of the 2% TA allowance for future TA needs if the full amount allowed under a capitalization grant is not used. From FFY 2022 through FFY 2026, the total unused amount of TA from the Base CWSRF appropriation is $753,260.00, the total unused amount of TA from the BIL CWSRF General Supplemental appropriation is $1,438,300.00, and the total unused amount of TA from the BIL CWSRF EC appropriation is $147,960.00. • Base CWSRF: The Hawai‘i CWSRF program does not plan to utilize the 2% TA from the FFY 2026 Base CWSRF appropriation. • BIL CWSRF General Supplemental: The Hawai‘i CWSRF program does not plan to utilize the 2% TA from the FFY 2026 BIL CWSRF General Supplemental appropriation. • BIL CWSRF EC: The Hawai‘i CWSRF program does not plan to utilize the 2% TA from the FFY 2026 BIL CWSRF EC appropriation. 20. Clean Watershed Needs Survey (CWNS): The BIL expands the CWNS to include all capital projects eligible for CWSRF funding. The Hawai‘i CWSRF will continue to complete and submit data to the CWNS Data Entry Portal (DEP) every four (4) years as required. Table 1 lists projects that Hawai‘i CWSRF plans to fund in SFY 2027. Although other projects may have a higher ranking, those projects are not ready to proceed at this time. Table 1: CWSRF Projects to be Funded in SFY 2027 Project No./Estimated EstimatedNPDES State Ad. Sub.FFATASubrecipient/Loan LoanPermit No.Match (GPR/Afford. Crit.)(Base/BIL/EC)Project Name Date Amount $ 553,20055-08: Kauai Wailua WWTP Improvements Phase II HI0020257 7/15/2026 $ 10, 000,000 (Base-Cong.) 59-29: Kauai Lihue WWTP Rehabilitation N/A 7/15/2026 $ 5, 000,000 54-32: Maui Napili No. 3 Force Main Replacement N/A 8/15/2026 $ 1, 800,000 54-42: Maui Napili No. 4 Force Main Replacement N/A 8/15/2026 $ 1, 800,000 59-25: Kauai Best Management Practice (BMP) HIR10H655 9/15/2026 $ 10,193,790Improvements at Various Refuse Transfer Stations (SLA2) 54-56: Maui Napili No. 1 Force Main Replacement N/A 9/15/2026 $ 3, 700,000 $ 3,815,80062-53: Hawaii Hilo WWTP Rehabilitation and (BIL)$ 3,516,303 $ 5, 532,000HI0021377 10/15/2026 $ 14, 808,401 ACReplacement Project Phase I (SLA2)$ 1,106,400 (BIL)(Base) (Base) $ 553,200 GPR54-53: Maui Lahaina Recycled Water Force Main (Base-sta.)N/A 3/15/2027 $ 8, 000,000Construction/Rehabilitation $ 2,963,104 GPR(BIL.) 51-77: Honolulu-BWS East Kapolei 215 R-1 3.0 MG N/A 4/15/2027 $ 8, 824,610Reservoir and 16-Inch Transmission Main 51-83: Honolulu-BWS Kualakai Parkway: 16-Inch R-1 N/A 4/15/2027 $ 3, 238,999Transmission Main $ 1,869,303 GPR $ 19,079,00051-82: Honolulu-ENV Honouliuli WWTP Phase 1C - (BIL)Headworks, HRBC, Solids Process and Misc. HI0020877 4/15/2027 $ 21, 576,000 (BIL) $ 1,647,000 GPR $ 1,647,000Improvements (SLA3)(BIL-EC)(BIL-EC) KA-03: Kauai County of Kauai Residential Cesspool $ 1,000,000N/A 5/15/2027 $ 1, 000,000 GPRConversion Program 3 (BIL) TOTAL $ 89, 941,800 Minimum Executed Loans $ 89, 941,800 DRAFT 10 III.Long-Term and Short-Term Goals The Hawai‘i CWSRF Program has developed long-term and short-term goals, listed in Table 2 and Table 3, respectively. Table 2: Long-Term Goals 1.Provide financial assistance for eligible projects that protect Hawai‘i’s public health; correct surface water quality impairment; eliminate or prevent ground water contamination; control point and non-point pollution sources; promote water reuse, energy efficiency and sustainability; and achieve compliance with federal and state water quality standards. 2.Ensure fiscal soundness and perpetuity of the CWSRF. 3.Ensure equitable access to financial assistance for underserved and small communities in Hawaii, providing tailored support to address their water infrastructure challenges and promote sustainable practices in compliance with regulatory standards. 4.Support the State of Hawaiʻi’s mandate to eliminate all cesspools by 2050 (Act 125) by providing assistance to replace cesspools with approved wastewater treatment systems. Table 3: Short-Term Goals 1.Promote water reuse, energy efficiency, and/or other innovative environmental projects. 2.Reduce all unliquidated loan obligations. 3.Provide loans with competitive interest rates while still assuring the program's perpetuity. 4.Revisit standard operating procedures to improve program efficiency. 5.Prepare a strategic outreach/marketing plan and project planning process and procedures to address the slow rate of readiness by assistance recipients to enter into commitment agreements, and to establish a sustainable pipeline of projects. 6.Enhance disbursement efficiency by streamlining procedures and reducing processing times, ensuring timely release of funds to eligible projects, while maintaining stringent oversight to guarantee proper allocation. 7.Ensure high fund utilization rates by maintaining a robust pipeline of ready-to-go projects, continuously identifying and preparing projects for funding to meet demand and maximize program effectiveness. DRAFT 11 IV. Project Eligibility and Selection CWSRF project funding is available for public facilities and systems owned by a state or county government agency. Projects eligible for funding must be listed on the current Project Priority List (Appendix B – Hawai‘i – Project Priority List for SFY 2027). All projects scheduled for CWSRF funding will be reviewed for consistency with appropriate plans developed under Sections 208, 303(e), 319, and 320 of the FWPCA. All CWSRF-eligible projects and activities may be funded through the Base CWSRF and BIL CWSRF General Supplemental appropriations. Projects and activities with a primary purpose of addressing emerging contaminants may be funded through the BIL CWSRF EC appropriation. The Water Resources Reform and Development Act of 2014 amendments expanded the CWSRF project eligibility. The CWSRF Program will be evaluating the feasibility of including land purchases, privately owned systems, and decentralized wastewater treatment system projects in the program. Stormwater discharges from municipal separate storm sewer systems (MS4) are a major concern in urbanized areas due to the high concentration of pollutants found in these discharges. The Hawai‘i CWSRF Program provides loan funding for the construction of MS4 projects. Table 4 shows the types of projects that are eligible for CWSRF funding. DRAFT 12 Table 4: Project Eligible for CWSRF Funding 1.Point Source Projects: a.New, expanded, or rehabilitated wastewater treatment plants. b.Publicly owned water reuse systems and distribution lines. c.New or rehabilitated collector, trunk, and interceptor sewers. d.Sludge reuse, treatment, and disposal facilities. e.Septage handling, marine vessel pump out, and treatment facilities. 2.Non-Point Source (NPS) Projects: a.Watershed planning/assessment or implementation of projects needed to restore NPS impaired waters. b.Cesspool replacement with septic tanks, aerobic units, constructed wetlands, or treatment plants. c.Equipment purchase of street sweepers, catch basin vacuum vehicles, and sediment traps and basins. d.Capping and closure of municipal solid waste landfills, landfill reclamation, landfill leachate collection, storage and treatment, and landfill gas collection and control systems. e.Brownfield projects involving site assessments, underground storage tank removal and disposal, contaminated soil or sediment removal and disposal, capping wells, soil remediation, controlling stormwater runoff, and monitoring groundwater and surface water for contaminants. f.Water quality projects involving leachate and stormwater management at municipal solid waste transfer stations. g.Stormwater management projects. Project selection is based on the project’s priority ranking as well as its readiness to proceed. The project ranking system, shown in Appendix A – CWSRF Project Ranking Criteria, assigns points to potential projects based on various criteria such as whether a project corrects surface water quality impairment, results in energy efficiency, water efficiency, or achieves compliance with a federal or state enforcement issue. Points for each project are totaled and a Project Priority List is compiled (Appendix B – Hawai‘i – Project Priority List for SFY 2027) listing projects in the order of highest to lowest priority. However, a significant factor in project selection is the project’s readiness to proceed. If a project is high in priority, but not ready to commence, then it may be bypassed. V.Loan Policies Projects selected for funding are financed based on no more than the useful life of the project or 30 years, whichever is less. The CWSRF may provide Programmatic Financing loans to interested counties. If there are sufficient CWSRF funds, then 100% of eligible project costs are financed. Projects are subject to an annual interest rate of 0.25% and a semi-annual loan fee of 0.5%. This results in a total loan rate of about 1.25%, which remains fixed over the life of the loan. At the end of each state fiscal year, current rates are evaluated to determine if adjustments are needed. DRAFT 13 VI. Financial Management Table 5 shows projections for SFY 2027 sources and uses of funds. Included in the fund sources are loan fees collected, which are classified as either "program income" or "non-program income". Program income from loan fees covers activities directly related to administering the Hawai‘i CWSRF Program, such as issuing and servicing loans, engineering support, financial and legal consultation, and reimbursement for relevant services provided by the State. All non-program income from loan fees that will be collected in SFY 2027 will be used to pay for personnel and operating expenses (e.g., salaries, supplies, travel, equipment, etc.). There will be no excess fees available to fund other activities. As allowed in accordance with the FWPCA section 603(d)(7), the Hawai‘i CWSRF Program will be utilizing 1/5 percent per year of the current valuation of the fund (not including any fees collected that are placed in the fund) to cover administrative expenses for Program activities. The current valuation of the fund is $656,581,703.00. For SFY 2027, the CWSRF Program plans to use $1,313,100.00 from the fund to cover activities directly related to administering the CWSRF Program. Non-program income generated from loan fees covers various water quality program activities, including operation and maintenance inspections of wastewater pollution control facilities (45%), the recycled water program (11%), the bio-solids program (11%), and other water quality program activities (33%). Table 5: Sources and Uses of SFY 2027 Funds Loan funds available, end of SFY 2026 3,838,200$ Federal Capitalization Grant, FFY 2026 (Base)5,532,000$ State Match of 20% projected for Feb. 2027 (Base)1,106,400$ Federal Capitalization Grant, FFY 2026 (BIL-General)19,079,000$ State Match of 20% projected for Feb. 2027 (BIL-General)3,815,800$ Federal Capitalization Grant, FFY 2026 (BIL-EC)1,647,000$ Loan repayments 51,423,400$ Investment Interest 3,500,000$ Program Fees 50,100$ Non-Program Fees 4,324,500$ 1/5 % of Net Assets 1,313,100$ 95,629,500$ Executed Loans 89,941,800$ Administrative Expenses 5,687,700$ 95,629,500$ Total Uses SFY 2027 Projected Uses SFY 2027 Projected Fund Sources Total Sources Table 6 shows the capitalization grant payment and disbursement projections based on an anticipated FFY 2026 capitalization grant award date of October 2026, and a state match date of December 2026. 5,532,000.00 9,079,000.00 1,647,000.00$ 1,647,000.00 Table 6: Capitalization Grant Payments and Disbursements for FFY 2026 Application for ASAP FFY Quarter Period EPA Payments Draws 2027 1 Oct. - Dec. 2026 -$ -$ 2027 2 Jan. - Mar. 2027 -$ -$ 2027 3 Apr. - Jun. 2027 $ 5,532,000.00$ 2027 4 Jul. - Sep. 2027 19,079,000.00$ 1$ 2028 1 Oct. - Dec. 2027 $ 2028 2 Jan. - Mar. 2028 -$ -$ 2028 3 Apr. - Jun. 2028 -$ -$ 2028 4 Jul. - Sep. 2028 -$ -$ TOTAL 26,258,000.00$ 26,258,000.00$ Note: ASAP is the Automated Standard Application for Payments. DRAFT 14 Table 7 shows the status of the additional subsidies for grants that were closed out. Table 7: Status of Additional Subsidies for Closed Grants SFY FFY Grant Type Grant Required % of Grant Disbursed Subsidy Undisbursed Subsidy Subsidy in Executed Loans 2024 2023 BIL Supp.$16,144,000.00 $7,910,560.00 $3,994,380.00 $3,916,180.00 Yes On July 8, 2024, the Hawaii House Bill HB 2453 HD1 SD2 CD1 RELATING TO WATER INFRASTRUCTURE was signed into law as Act 218. This law authorizes the grant transfer authority between the Drinking Water Treatment Revolving Loan Fund and the Water Pollution Control Revolving Fund programs, as currently allowed under title 40 Code of Federal Regulations section 35.3530(c). For SFY 2027, no transfers between the two programs are planned. VII.Other Requirements of the Act The following commitments are intended to meet specific requirements of the Act: 1.Section 602(a) - Environmental Reviews: The State of Hawaiʻi (State) will conduct environmental reviews in accordance with the State Environmental Review Process Document that was approved by EPA on February 20, 2018. 2.Section 602(b)(2) - State Matching Funds: The State agrees to deposit into the CWSRF from State monies a certain percentage of the amount of each EPA grant payment on or before the date on which the State receives each grant award payment. The Hawaiʻi CWSRF program will receive the required state match for the Base CWSRF and BIL CWSRF General Supplemental grants from the Hawaiʻi Legislature appropriation from the issuance of general obligation bond funds. DRAFT 15 a. Base CWSRF State Matching Funds: “[T]he State will deposit in the fund from State moneys an amount equal to at least 20 percent of the total amount of all capitalization grants which will be made to the State with funds to be made available under this title and section 205(m) of this Act on or before the date on which each quarterly grant payment will be made to the State under this title”. b. BIL CWSRF General Supplemental State Matching Funds: “Provided further, [t]hat for the funds provided under this paragraph in this Act in [Federal] fiscal year 2022 and [Federal] fiscal year 2023, the State shall deposit in the State loan fund from State moneys an amount equal to at least 10 percent of the total amount of the grant to be made to the State, notwithstanding sections 602(b)(2), 602(b)(3) or 202 of the Federal Water Pollution Control Act”. The match requirement returned to 20 percent of the capitalization grant in federal fiscal year 2024 and thereafter. c. BIL CWSRF EC State Matching Funds: “Provided further, [t]hat funds provided under this paragraph in this Act shall not be subject to the matching or cost share requirements of sections 602(b)(2), 602(b)(3), or 202 of the Federal Water Pollution Control Act”. 3. Section 602(b)(3) - Binding Commitments: The State will enter into binding commitments for 120 percent of each quarterly payment within one year after receipt of each quarterly payment. A binding commitment is when a commitment notice is issued for a project. Commitment Notices are issued for projects that are planned to be funded. 4. Section 602(b)(4) - Expeditious and Timely Expenditures: The State will expend all funds in the CWSRF in an expeditious and timely manner, consistent with law, regulation, and guidance. States must make commitments (i.e., they must sign assistance agreements, such as loans, with eligible recipients) within one (1) year after the receipt of each capitalization grant payment from the EPA. States must make an effort to draw down (expend) funds within two (2) years of the capitalization grant award. 5. Section 602(b)(7) - State Laws and Procedures: The State agrees to expend each quarterly grant payment in accordance with its laws and procedures. 6. Consistency with Planning: The State agrees that it will not provide assistance to any project unless that project complies with all agreements and is consistent with plans developed under Sections 208, 303(e), 319, or 320 of the Act. 7. National Reporting Needs: The State agrees to provide data or information to EPA as required for national reports and Congressional or public inquiries. DRAFT 16 Appendix A – CWSRF Project Ranking Criteria Hawai‘i Department of Health Priority System Policies I. General Policy The State of Hawai‘i priority system describes the criteria and method used to rank wastewater pollution control projects considered eligible for SRF funding assistance. The Department of Health (DOH) gives high priority to projects protecting water quality and contributing to the Green Project Reserve and/or sustainability issues such as water reuse, energy efficiency, renewable energy, and environmentally innovative technologies. DOH also funds projects to achieve compliance with enforcement issues and considers the need for the project. II. Project Priority List and Project Selection The loan applicant submits a Proposed Project for SRF Funding Form (Form D-1) (see Figure 1) for each new project to be considered for funding. The applicant provides a project description and checks off all criteria applicable to the project. Each criterion is assigned a specific number of points. Points for each project are totaled and eligible projects are compiled into a Project Priority List in the order of the project’s ranking, with the highest priority going to those projects with the highest number of points. Generally, proposed projects will be prioritized in the following order: 1. Water quality protection projects that correct surface water quality impairment or eliminate/prevent groundwater contamination. 2. Green projects which promote water reuse, energy efficiency, renewable energy, sludge reuse, sustainable infrastructure, and/or environmentally innovative technologies. 3. Enforcement-related projects which are necessary to achieve compliance with a federal or state compliance issue, consent decree, or court order. 4. Project need is also considered. Points are awarded for secondary treatment, sewer rehabilitation, non-point source issues, and stormwater management. Project selection is based on the project’s ranking, the project’s readiness to proceed to construction, and the amount of funds available for the particular fiscal year. If additional SRF funds are available later in the fiscal year, projects are selected for funding from the current Project Priority List. A project on the list may be bypassed if the project is not ready to proceed when the funding is available. III. Ranking Projects with an Equal Number of Points In the event two or more projects are ready to proceed at the same time and have the same number of points, project selection will be based on the following tie-breaking criteria: 1. First criterion: Priority given to the project whose county has not had an SRF project selected for funding. If this applies to more than one county, the second criterion will be used. 2. Second criterion: Project serving the largest population will have priority. DRAFT 17 IV. Intended Use Plan The Project Priority List and selection of projects intended to be funded are included in the annual Intended Use Plan (IUP), which describes the intended use of federal and state funds available to the program for the upcoming fiscal year. The IUP is subject to a 30-day public comment period during which time the public is encouraged to participate and comment on the IUP. At the conclusion of the comment period, DOH may revise the IUP as necessary, depending on the comments received. The final IUP is then provided to all loan applicants and to the EPA. DRAFT 18 Figure 1: Proposed Project for SRF Funding Form (Form D-1) DRAFT 19 Appendix B – Hawaiʻi – Project Priority List for SFY 2027 Priority Ranking Project Number Borrower Project Name Estimated Eligible Amount Points Estimated Start Date 1 C150090-07 County of Hawaii Nāʻālehu Wastewater Treatment and Disposal System and Drainage Modifications 49,000,000.00 29 4/1/2028 2 C150055-15 County of Kauai Wailua WWTP New Plant Construction 140,000,000.00 29 7/1/2030 3 C150051-81 City and County of Honolulu - ENV Honouliuli WWTP Secondary Treatment Phase 1B - Secondary Compliance Facilities 273,509,898.00 27 2/14/2019 4 C150059-32 County of Kauai Lihue WWTP Plant Expansion Phase I 75,000,000.00 27 7/1/2029 5 C150051-80 City and County of Honolulu - ENV Honouliuli WWTP Secondary Treatment Phase 1A - Sludge Drying and Related Facilities 72,735,704.00 25 10/29/2018 6 C150090-05 County of Hawaii Pāhala Large Capacity Cesspool Conversion 35,000,000.00 25 4/1/2026 7 C150090-04 County of Hawaii Nāʻālehu Wastewater Collection System 62,000,000.00 25 1/1/2027 8 C150080-40 County of Hawaii Kealakehe WWTP Headworks Upgrade 57,500,000.00 25 4/1/2029 9 C150062-53 County of Hawaii Hilo WWTP Rehabilitation and Replacement Project Phase I 100,000,000.00 24 2/1/2025 10 NPS0048-14 City and County of Honolulu - FM GSI Planning Study in the Vicinity of the Kaelepulu Stream, Kailua, Oahu 750,000.00 24 9/1/2026 11 C150054-53 County of Maui Lahaina Recycled Water Force Main Construction/Rehabilitation 23,000,000.00 22 1/1/2027 12 C150050-19 County of Kauai Eleele WWTP Plant Expansion 50,000,000.00 22 7/1/2029 13 RCC00KA-01 County of Kauai County of Kauai Residential Cesspool Conversion Program 1 2,000,000.00 21 7/1/2024 14 C150090-08 County of Hawaii Pāhala Wastewater Collection System 31,000,000.00 21 9/24/2024 15 C150051-89 City and County of Honolulu - ENV Honouliuli WWTP Phase 1D - Influent Pump Station, Flow Storage, and Misc. Improvements 173,000,000.00 21 6/30/2026 16 RCC00KA-02 County of Kauai County of Kauai Residential Cesspool Conversion Program 2 1,000,000.00 21 7/1/2026 17 RCC00KA-03 County of Kauai County of Kauai Residential Cesspool Conversion Program 3 1,000,000.00 21 7/1/2027 18 C150054-57 County of Maui Wahikuli Sewer System 18,000,000.00 21 7/1/2027 19 C150055-19 County of Kauai Wailua Houselots Sewer Collection System Expansion 65,000,000.00 21 7/1/2029 20 C150047-13 County of Kauai Waimea WWTP Tsunami Plant Relocation or Hardening Construction 100,000,000.00 21 7/1/2030 21 C150047-16 County of Kauai Kekaha Community Sewer Collection System Expansion 120,000,000.00 21 7/1/2030 22 C150055-25 County of Kauai Kawaihau Cesspool Conversion Service Expansion 325,000,000.00 21 7/1/2030 23 NPS0048-11 City and County of Honolulu - FM Oahu Green Stormwater Infrastructure (GSI) Implementation Plan 2,900,000.00 19 7/1/2025 24 NPS0048-12 City and County of Honolulu - FM Oahu Green Stormwater Infrastructure (GSI) Pilot Project in Kakaako 850,000.00 19 10/1/2025 25 C150052-65 County of Maui Wailuku-Kahului Soil Aquifer Treatment (SAT) Basins 10,000,000.00 19 9/1/2026 26 C150077-36 County of Maui Kihei Wastewater Pump Station No. 7 Relocation 11,900,000.00 19 9/1/2026 27 C150059-25 County of Kauai Best Management Practice (BMP) Improvements at Various Refuse Transfer Stations 36,200,000.00 17 9/1/2021 28 C150054-48 County of Maui Napili Wastewater Pump Station No. 4 Modifications 4,600,000.00 17 3/20/2023 29 C150055-10 County of Kauai Wailua WWTP NPDES Compliance Improvements 5,000,000.00 17 7/1/2027 30 C150052-75 County of Maui Old Wailuku Heights Sewer System 6,000,000.00 17 1/1/2029 31 C150048-15 Hawaii Department of Hawaiian Home Lands Papakōlea Sewer Modernization Project 20,988,340.00 16 6/1/2025 DRAFT 20 Appendix B – Hawaiʻi – Project Priority List for SFY 2027 32 C150055-06 County of Kauai Wailua SPS #3 Rehabilitation 10,000,000.00 16 9/1/2025 33 C150059-22 County of Kauai Hanama'ulu Collection System Rehabilitation 3,000,000.00 16 8/1/2026 34 C150052-74 County of Maui Upper Waiko Road Sewer Extension 2,000,000.00 16 9/1/2026 35 C150052-20 County of Maui Waiko Road Subdivision Sewer System 2,500,000.00 16 9/1/2026 36 C150047-15 County of Kauai Waimea Dairy & Captain Cooke SPS Upgrade 16,000,000.00 16 7/1/2027 37 C150051-74 City and County of Honolulu - ENV Waipahu Wastewater Pump Station Force Main New 150,000,000.00 16 10/1/2027 38 C150047-14 County of Kauai Waimea Infiltration and Inflow Repairs 10,000,000.00 16 7/1/2028 39 C150055-18 County of Kauai Wailua Infiltration and Inflow Repairs 10,000,000.00 16 7/1/2028 40 C150059-33 County of Kauai Lihue Infiltration and Inflow Repairs 15,000,000.00 16 7/1/2028 41 C150050-16 County of Kauai Hanapepe Sewer Collection System Expansion (Moi Rd)11,000,000.00 16 7/1/2029 42 C150050-20 County of Kauai Eleele Infiltration and Inflow Repairs 15,000,000.00 16 7/1/2029 43 C150047-18 County of Kauai Waimea Menehune and Alawai SPS Rehabilitation 6,000,000.00 16 7/1/2030 44 C150051-84 City and County of Honolulu - ENV Honouliuli WWTP Solids Process Biogas Cleaning and Storage System 33,825,000.00 15 10/7/2022 45 C150054-46 County of Maui West Maui Recycled Water System Expansion 18,000,000.00 15 4/1/2023 46 C150051-82 City and County of Honolulu - ENV Honouliuli WWTP Phase 1C - Headworks, HRBC, Solids Process and Misc. Improvements 517,000,000.00 15 9/29/2023 47 NPS0048-09 City and County of Honolulu - FM Storm Water Pollution Preventative Maintenance Equipment Phase 2 139,000.00 15 12/1/2025 48 NPS0048-10 City and County of Honolulu - FM Storm Water Pollution Preventative Maintenance Equipment Phase 1 198,000.00 15 12/1/2025 49 C150052-66 County of Maui Wailuku-Kahului Recycled Water Pump Station 6,000,000.00 15 9/1/2027 50 C150055-16 County of Kauai Wailua WWTP Improvements Phase III 50,000,000.00 14 7/1/2027 51 C150052-25 County of Maui Wailuku-Kahului Recycled Water Force Main 39,000,000.00 14 9/1/2027 52 C150054-45 County of Maui Napili Wastewater Pump Station No. 3 Modifications 4,600,000.00 12 11/1/2024 53 C150077-37 County of Maui Kihei Wastewater Pump Station No. 8 Modifications/Upgrade 4,000,000.00 12 1/1/2026 54 C150059-35 County of Kauai Lihue & Eleele Septage Receiving Station Upgrade 4,000,000.00 12 7/1/2026 55 C150052-76 County of Maui Aeration Basin - Kahului Wastewater Treatment Facility 19,200,000.00 12 7/1/2026 56 C150055-08 County of Kauai Wailua WWTP Improvements Phase II 25,500,000.00 12 7/1/2026 57 C150077-21 County of Maui Kihei Wastewater Pump Station No. 5 Modifications and Force Main Upgrade 4,250,000.00 12 9/1/2027 58 C150077-35 County of Maui Kihei Wastewater Pump Station No. 6 Modifications/Upgrade 6,800,000.00 12 9/1/2027 59 C150054-58 County of Maui Lahaina Sewer System Improvements 11,000,000.00 11 7/1/2026 60 C150054-59 County of Maui Replacement of Lahaina Wastewater Pump Station #5 & #6 19,500,000.00 11 7/1/2026 61 C150077-29 County of Maui North Kihei Mauka Transmission System 17,000,000.00 11 9/1/2027 62 C150054-36 County of Maui Kaanapali Resort R-1 Water Distribution System Expansion 8,500,000.00 10 1/1/2024 63 C150051-77 Honolulu Board of Water Supply East Kapolei 215 R-1 3.0 MG Reservoir and 16-Inch Transmission Main 19,600,000.00 10 1/15/2026 64 C150051-83 Honolulu Board of Water Supply Kualakai Parkway: 16-Inch R-1 Transmission Main 16,500,000.00 10 3/1/2026 65 C150054-40 County of Maui Honokowai R-1 Distribution System Expansion 4,300,000.00 10 9/1/2026 DRAFT 21 Appendix B – Hawaiʻi – Project Priority List for SFY 2027 66 C150052-71 County of Maui Central Maui Regional WWRF (Waikapu)55,000,000.00 10 9/1/2026 67 C150051-85 Honolulu Board of Water Supply Kapolei Parkway 24-Inch R-1 Water Main 1,100,000.00 10 6/15/2027 68 C150077-40 County of Maui Liloa Drive Recycled Water Distribution Line 4,000,000.00 10 9/1/2027 69 C150077-41 County of Maui North Kihei Reuse Distribution Expansion 4,000,000.00 10 9/1/2027 70 C150052-24 County of Maui Wailuku-Kahului Wastewater Reclamation Facility (WWRF) Upgrade to R-1 18,000,000.00 10 1/1/2030 71 C150054-32 County of Maui Napili No. 3 Force Main Replacement 1,800,000.00 9 6/1/2020 72 C150054-42 County of Maui Napili No. 4 Force Main Replacement 1,800,000.00 9 3/20/2023 73 C150055-13 County of Kauai Wailua Sewer Collection System Inspection 300,000.00 9 12/1/2025 74 C150054-56 County of Maui Napili No. 1 Force Main Replacement 3,700,000.00 9 6/1/2026 75 C150077-27 County of Maui Kihei No. 6 Force Main Replacement 6,000,000.00 9 9/1/2027 76 C150062-54 County of Hawaii Hilo WWTP Rehabilitation and Replacement Project Phase II 100,000,000.00 9 10/30/2027 77 C150054-55 County of Maui Lahaina Wastewater Reclamation Facility RAS/Dewatering Upgrades 22,409,000.00 8 12/1/2025 78 C150055-17 County of Kauai Wailua WWTP Environmental and Land Acquisition Study 2,000,000.00 7 7/1/2025 79 C150051-88 City and County of Honolulu - ENV Honouliuli WWTP Effluent Treatment & Outfall Improvements 50,000,000.00 5 12/1/2026 80 C150050-12 County of Kauai ʻEleʻele Subdivision Collection System Rehabilitation 4,000,000.00 4 8/15/2023 81 C150059-31 County of Kauai Lihue Aerated Solids Contact Tank Improvement 4,500,000.00 4 3/1/2025 82 C150059-27 County of Kauai Rehab Septage Receiving Areas Lihue and Eleele WWTP 4,000,000.00 4 7/1/2026 83 C150055-12 County of Kauai Kaua'i Sewage Pump Station Upgrades 7,000,000.00 4 7/1/2026 84 C150052-68 County of Maui Kehalani Pump Station 9,000,000.00 4 1/1/2027 85 C150052-72 County of Maui Kehalani Force Main and Gravity Sewer 16,800,000.00 4 1/1/2027 86 C150055-09 County of Kauai Coco Palms Sewer Collection System Odor Control 1,000,000.00 4 7/1/2027 87 C150050-18 County of Kauai Hanapepe Fire Station SPS Upgrade 4,500,000.00 4 7/1/2027 88 C150050-17 County of Kauai Hanapepe River Side SPS Upgrade 4,500,000.00 4 7/1/2027 89 C150055-03 County of Kauai Kapaa Town-Waipouli Collections System 5,000,000.00 4 7/1/2027 90 C150055-24 County of Kauai Wailua SPS #4 and #5 Upgrade 10,000,000.00 4 7/1/2027 91 C150059-29 County of Kauai Lihue WWTP Rehabilitation 26,500,000.00 4 7/1/2027 92 NPS0062-29 County of Hawaii Hilo Scrap Metal Yard Remediation 16,960,000.00 4 7/1/2028 93 C150051-90 City and County of Honolulu - ENV Pearl City/Waipahu Trunk Sewer 160,000,000.00 4 6/30/2029 94 C150077-43 County of Maui South Kihei Capacity Sewer Upgrades 12,000,000.00 4 1/1/2030 95 C150051-87 City and County of Honolulu - ENV Waipahu Wastewater Pump Station Force Mains Rehabilitation 130,000,000.00 4 6/1/2030 96 C150055-21 County of Kauai Wailua Arzadon SPS Upgrade 8,000,000.00 4 7/1/2030 97 C150055-20 County of Kauai Wailua Aloha Lumber SPS Upgrade 10,000,000.00 4 7/1/2030 98 C150055-22 County of Kauai Wailua Coco Palms SPS Upgrade 12,000,000.00 4 7/1/2030 99 C150055-23 County of Kauai Wailua New Parallel Force Main and Pumps - Odor Control 13,500,000.00 4 7/1/2030 100 C150062-43 County of Hawaii Pua Force Main Installation and Rehabilitation 46,000,000.00 4 7/1/2030 3,727,714,942.00 DRAFT 22 Appendix C – Summary of Public Comments I.Public Participation Pursuant to 40 CFR 35.3150, the proposed Intended Use Plan, as well as a public notice soliciting public comments, were posted from May ##, 2026 through June ##, 2026 on the Hawaiʻi CWSRF website at https://health.hawaii.gov/wastewater/home/cwsrf/. II.Testimony and Comments During the thirty-day public comment period described above, the below comment(s) were received by the Department of Health. [if applicable, then comments and responses to be input prior to finalizing document.] III.Summary There was/were number (#) comment(s) to the Intended Use Plan received in response to the solicitation for public input. JONATHAN NAGATO, P.E., CHIEF Wastewater Branch