Hawaii just made it a little easier to get rid of one of the state's biggest hidden property liabilities. Governor Josh Green signed House Bill 1618 into law in July, creating a new revolving loan fund that offers low-interest and, in some cases, forgivable loans to homeowners converting outdated cesspools to code-compliant septic or sewer systems. If you own, are buying, or are selling a home with a cesspool anywhere in the islands, this is worth understanding now, not when the deadline is bearing down on you.
What Changed: A New Loan Fund for Cesspool Conversions
House Bill 1618 establishes a Cesspool Conversion Revolving Loan Fund, administered by the Hawaii Green Infrastructure Authority, which will offer eligible homeowners low-interest and, in some cases, forgivable loans to help cover the cost of upgrading a cesspool to a septic tank, aerobic treatment unit, or connection to a municipal sewer line. State Senator Chris Lee, who chairs the Senate Committee on Water, Land, Culture and the Arts, said the goal is to make it possible for families who need help the most to install cleaner, more affordable systems and stop cesspools from polluting nearshore waters. This is on top of income tax credits and other grant programs that have existed in a more limited form for several years.
Why This Matters: 88,000 Cesspools and a 2050 Deadline
There are roughly 88,000 active cesspools statewide, discharging an estimated 50 million gallons of untreated wastewater into the ground every day. Under Act 125, passed back in 2017, every cesspool in Hawaii must be upgraded to a septic system or connected to a sewer line by 2050. For most homeowners that deadline still feels far off, but a typical conversion runs $20,000 to $50,000 or more once you account for excavation through volcanic rock, engineering, and permitting, so waiting until the last minute is rarely the cheaper option. Lenders and appraisers are already paying closer attention to this, and a home with an unconverted cesspool can appraise lower than a comparable home that has already made the switch.
Priority Zones Can Move Up Your Deadline
The 2050 deadline is the outer limit, not a guarantee. The Department of Health has sorted cesspools into Priority 1, 2, and 3 zones based on how much risk they pose to drinking water and coastal waters, and homes in Priority 1 zones, generally those near sensitive shorelines or municipal water sources, are being targeted for conversion well before 2050. Any major renovation that adds a bedroom or significantly changes the plumbing can also trigger an immediate upgrade requirement, which matters if you are eyeing a property for an addition or an accessory dwelling unit. If you are not sure which zone a property falls into, that is a question worth asking the county or a qualified inspector before you write an offer or list a home.
How Cesspools Are Already Showing Up in Purchase Contracts
Buyers are no longer willing to absorb the full future cost of a cesspool conversion without some kind of concession, and sellers who ignore that are watching their listings sit longer. In escrow, this tends to play out a few ways:
- Price credit or reduction: the buyer gets a formal engineering estimate during inspection and negotiates a credit equal to the projected conversion cost.
- Seller-funded upgrade: the offer is contingent on the seller completing the conversion before closing, so the buyer takes title to a fully compliant system.
- Escrow holdback: a portion of the seller's proceeds is held back to cover the conversion after closing when timing is tight.
What Buyers, Sellers, and Owners Should Do Now
If you own a home with a cesspool, it's worth getting a rough conversion estimate now and checking whether the new loan fund or existing tax credits could offset the cost, rather than waiting for a sale or a Department of Health notice to force the issue. If you're selling, get ahead of it: a recent inspection and an estimate in hand will save you from a rushed, worse-priced negotiation once a buyer's inspector flags it. If you're buying, ask directly whether a property has a cesspool and which priority zone it falls in before you get deep into escrow, since that answer affects both your financing and your future costs. And if you're financing with a conventional loan, check with your lender early, since some are already underwriting more conservatively around unconverted systems.
None of this makes cesspool conversion cheap, but the new loan fund is a real, if modest, step toward making it more manageable for the families who need it most. Whether you're weighing an offer on a home with an older system or thinking about converting one you already own, it pays to run the numbers before the deadline runs them for you. Reach out any time if you want help sizing up what a specific property's cesspool situation means for your plans.