New rental vehicle surcharge would fund revenue bonds for north end of Lahaina Bypass

A revenue bond with repayment funded by a rental car surcharge is being proposed as a source of funding for building the northern portion of the Lahaina Bypass.

Senate Bill 1659, introduced by West Maui Sen. Angus McKelvey, would add a 10-year special assessment to the rental car surcharge tax to pay for construction of the Lahaina Bypass from its current Lahaina town terminus at Keawe Street to its planned northern end at Honokōwai.

The special assessment would sunset after 10 years, but during its existence, it would pay for the principal and interest of revenue bonds for the construction, operation and maintenance of the Lahaina Bypass North, designated in the bill as a “critical infrastructure project for the state.”

“The bypass is vital for improving traffic flow, supporting emergency response and providing alternative access routes, especially in the wake of recent wildfires that have highlighted the vulnerabilities of the region’s transportation network,” the bill says.

The bill anticipates the need for the highway because of forecast growth in West Maui, “driven by new housing developments and increased tourism.”

Housing projects specified include projects under the state Department of Hawaiian Home Lands and the Hawaiʻi Housing Finance and Development Corp.

The bill would authorize the issuance of general obligation and revenue bonds to fund the project. It would permit public-private partnership agreements to carry out the new highway extension. The bill would also direct transient accommodations taxes collected from West Maui accommodations to fund the project.

McKelvey is the sole introducer of the bill on Thursday. As of Friday morning, it had not passed first reading or been referred to committee for review.

In addition to West Maui, McKelvey’s Senate District 6 includes Mā‘alaea, Waikapū and South Maui. McKelvey chairs the Senate Government Operations Committee with Vice Chair Mike Gabbard of Kapolei, Makakilo, Kalaeloa, portions of Fernandez Village and ‘Ewa.