Bill Text: HI SB3066 | 2014 | Regular Session | Amended

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Bill Title: Public-private Finance Initiative; Pilot Project; Appropriation ($)

Spectrum: Partisan Bill (Democrat 8-0)

Status: (Engrossed - Dead) 2014-04-24 - Conference committee meeting to reconvene on 04-25-14 3:00PM in conference room 423. [SB3066 Detail]

Download: Hawaii-2014-SB3066-Amended.html

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THE SENATE	S.B. NO.	3066
TWENTY-SEVENTH LEGISLATURE, 2014		S.D. 2
STATE OF HAWAII		H.D. 1

A BILL FOR AN ACT

 

 

RELATING TO THE PUBLIC-PRIVATE FINANCE INITIATIVE.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

PUblic-private FINANCE INITIATIVE

     §   -1  Findings and purpose.  The legislature finds that all levels of government face difficult economic times, as public service demands for an increasing population put pressure on revenue resources.  The State faces the challenge of balancing its budget while addressing escalating infrastructure and service needs.  Due to insufficient funding and postponed maintenance, these daily demands continue to increase.

     Governments around the world have engaged in public-private partnerships to address these economic challenges.  State agencies are hamstrung by their limited missions and dwindling resources.  Creating an agency to collaborate with all state agencies and private sector entities may help deliver government services and facilities more effectively.

     The legislature further finds that public-private partnerships give governmental entities an additional tool to deliver infrastructure through the ability to finance the design and construction of a building with a private developer.  Like any finance tool, there is a price tag that still falls to the taxpayer.  That price tag comes in the form of a long-term building lease where the developer can recoup its costs and realize a steady stream of cash through lease payments from a relatively stable tenant:  the government.

     The "hook," or value proposition, on both sides of the contract for the developer and the governmental entity lies squarely on the maintenance and operations terms of the contract.  If the developer is contractually required to maintain and operate the building over a long-term period, such as thirty years, an incentive is built-in to ensure that the developer balances design quality with the life-cycle performance of the building, including an efficient operational system.  This long-term incentive benefits the government, which will assume ownership of the property after expiration of the long-term lease.

     According to stakeholders with public-private partnership experience in other countries, one of the most remarkable differences with public-private partnership government buildings is that "the buildings always look new".  This demonstrates a notable advantage to public-private partnerships for government property owners, where maintenance and operations are contractually mandated and integrated.

     The purpose of this chapter is to create a means and process to use the skills and assets of both the public and private sectors to deliver services and facilities for the economic, environmental, and social benefit of the people of Hawaii.  This chapter establishes the public-private finance initiative to administer an appropriate and culturally-sensitive project.  The initiative shall coordinate and administer the project, while ensuring that resources are maintained for the people of Hawaii.  The initiative shall identify a suitable project, carry out appropriate analyses, enter into public-private agreements, and provide leadership for the facilitation of financing, improvement, or enhancement of appropriate facilities, operations, and property.

     §   -2  Definitions.  As used in this chapter, unless the context clearly requires otherwise:

     "Board" means the board of directors of the public-private finance initiative.

     "Cooperative agreement" means an instrument, such as a contract, compact, memorandum of understanding, or agreement, that is signed and binding upon all parties to the agreement.

     "Initiative" means the public-private finance initiative.

     "Management rights" means the authority to control and manage a project.

     "Project" means a specific undertaking related to the operations and properties of any public agency, including but not limited to:

     (1)  Development of plans for a public agency; and

     (2)  Planning, improvement, construction, rehabilitation, alteration, maintenance, or repair of real property or energy generation facilities.

     "Qualified person" means any individual, partnership, corporation, not-for-profit organization, or public agency possessing the competence, expertise, experience, and resources, including financial, personnel, and tangible qualifications, as deemed desirable by the initiative.

     §   -3  Public-private finance initiative; established.  (a)  There is established the public-private finance initiative, which shall be a public body corporate and politic and an instrumentality and agency of the State.  The initiative shall be headed by a board.  The initiative shall be placed within the department of business, economic development, and tourism for administrative purposes.

     The initiative shall:

     (1)  Identify a project that is suitable under this chapter;

     (2)  Conduct analyses, as appropriate;

     (3)  Enter into public-private partnership agreements, as appropriate; and

     (4)  Provide leadership for a public-private partnership project.

     (b)  The board shall consist of five voting members and one ex officio nonvoting member.  The voting members shall include:

     (1)  The comptroller, or deputy comptroller, or a designated representative;

     (2)  The director of finance, or a designated representative;

     (3)  The director of business, economic development, and tourism, or a designated representative;

     (4)  One member to be appointed by the speaker of the house of representatives; and

     (5)  One member to be appointed by the president of the senate.

The ex officio, nonvoting member shall be the aha moku advisory committee member of the moku in which the project is sited.

     The members appointed by the speaker of the house of representatives and the president of the senate shall possess sufficient knowledge, experience, and proven expertise in small and large businesses within the development or recreation industries, banking, real estate, finance, promotion, marketing, or management.

     The term of office of the members appointed by the speaker of the house of representatives and the president of the senate shall be four years.

     Three members shall constitute a quorum, and a minimum of three votes shall be necessary for all actions by the board.

     (c)  The board shall appoint an executive director, who shall serve at the pleasure of the board and shall be exempt from chapter 76.  The salary of the executive director shall be established by the board.

     (d)  The board, through its executive director, may appoint officers, agents, and employees; prescribe their duties and qualifications; and establish their salaries, without regard to chapter 76.

     (e)  The initiative shall have an independent consultant or in-house expert in facilities planning, design, and construction to assess the long-term projected needs of the government before considering the use of public-private partnerships.  The individual shall advise the government before private partners are solicited and may remain as advisor throughout the planning, design, and construction.

     §   -4  Powers, duties; generally.  (a)  Except as otherwise limited by this chapter, the initiative may:

     (1)  Sue and be sued;

     (2)  Have a seal and alter the same at its pleasure;

     (3)  Make and alter bylaws for its organization and internal management;

     (4)  Adopt rules under chapter 91 necessary to implement this chapter in connection with its project;

     (5)  Make and execute contracts, leases, and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter;

     (6)  Make lease payments to developers and public agencies;

     (7)  Develop guidelines to provide a fair and uniform process that enables private partners to properly assess the risks and rewards for engagement in public-private partnerships;

     (8)  Manage the project by itself or in partnership with qualified persons or other governmental agencies;

     (9)  Receive, examine, and determine the acceptability of applications of qualified persons for public-private partnerships;

    (10)  Encourage communication between bidders and the government end user during the request for proposals phase so the government end user may provide direct, meaningful input to the bidders in their development of bid proposals;

    (11)  Enable small businesses to compete by limiting the number of bidders allowed to submit proposals during the request for proposals phase and awarding reasonable stipends to unsuccessful bidders;

    (12)  Coordinate its activities with any federal or state programs;

    (13)  Provide advisory, consultative, training, and educational services and technical assistance to any person, partnership, or corporation, either public or private, to carry out the purposes of this chapter, and engage the services of consultants on a contractual basis for rendering professional and technical assistance and advice;

    (14)  Procure insurance against any loss in connection with its property and other assets and operations in amounts and from insurers as it deems desirable;

    (15)  Accept gifts or grants in any form from any public agency or any other source;

    (16)  Coordinate with any public agency;

    (17)  Recommend to the appropriate public agency the acquisition of any privately owned real or personal property that may be appropriate for the purposes of this chapter; and

    (18)  Do all things necessary or proper to carry out the purposes of this chapter.

     (b)  Upon the termination or dissolution of the initiative, the department of business, economic development, and tourism shall succeed to all the rights and the duties of the initiative arising out of the public-private partnership agreements, including leases and long-term operations and maintenance agreements.

     §   -5  Project and plans.  (a)  The initiative may develop plans and implement one project on behalf of a public agency, as appropriate.

     (b)  The initiative may enter into a cooperative agreement with any public agency to implement the project on behalf of the public agency.

     (c)  The initiative may enter into cooperative agreements with qualified persons or public agencies when the powers, services, and capabilities of the qualified persons or agencies are deemed necessary and appropriate.

     (d)  The initiative shall include a long-term maintenance and operations agreement in a public-private partnership.

     (e)  Prior to implementing any project, the initiative shall submit the proposed plan for the project, together with any amendments, to the board for its approval and to the executive head of any affected public agency.

     §   -6  Suitability tests.  For a project exceeding $60,000,000, the initiative shall perform a suitability test by comparing the value of long-term leases to existing project delivery models before issuing any request for qualifications or proposals.  Combining smaller, separate projects to meet the $60,000,000 threshold is prohibited.

     §   -7  Approval of a project.  A project to be undertaken by the initiative shall be approved by the board and the executive head of any affected public agency.

     §   -8  Transfer of management rights.  (a)  Notwithstanding chapter 171 or any provision of this chapter to the contrary, any public agency may transfer, subject to the approval of the board or executive of the public agency, management rights for a project under its jurisdiction to the initiative for purposes of this chapter.

     (b)  If the initiative finds that the project under the control and management of any public agency is suitable for its purposes under this chapter, the initiative may lease properties from or agree to manage the properties of the agency having jurisdiction, upon terms and conditions as agreed to by the parties.

     (c)  Notwithstanding subsection (b) to the contrary, no property shall be leased to the initiative if the lease would impair any covenant between the State or any county, or any department or board thereof, and the holders of bonds issued by the State or the county, or any department or board thereof.

     §   -9  Public-private partnership revenues.  Any revenues generated by or on behalf of the initiative from the public-private partnership project and plans undertaken pursuant to this chapter shall be deposited into the general fund.

     §   -10  Exemption from taxation.  The initiative shall not be required to pay state taxes of any kind.

     §   -11  Application of chapter.  The initiative and the  project implemented under this chapter shall comply with all state laws, other than with:

     (1)  Chapter 171 for the transfer of management rights identified in section    ‑8 and for leases;

     (2)  Chapter 103D for procurement activities; and

     (3)  State taxes as exempted under section    ‑10.

     §   -12  Reports and evaluation.  (a)  The initiative shall submit a complete and detailed annual report of its plans and activities as follows:

     (1)  To the governor no later than twenty days prior to the convening of each regular legislative session; and

     (2)  To the legislature, no later than sixty days after the submission of the report as required in paragraph (1).

     (b)  The board shall submit to the governor and the legislature, no later than twenty days prior to the convening of each regular session, an evaluation of the executive director appointed pursuant to section    -3."

     SECTION 2.  After the adoption of rules pursuant to section    -4(4), Hawaii Revised Statutes, established by section 1 of this Act, the public-private finance initiative shall initiate a pilot project on state lands in         to be administered in accordance with chapter      , Hawaii Revised Statutes, established by section 1 of this Act.  The pilot project shall terminate not later than October 1, 2017.

     SECTION 3.  The public-private finance initiative shall include in its annual report to the governor and the legislature required by section    -12(a), Hawaii Revised Statutes, a detailed report on the status of the pilot project established pursuant to section 2 of this Act.

     The public-private finance initiative shall notify the governor and the legislature upon the completion of the pilot project and, within ninety days of its completion, submit a report to the governor and the legislature containing a review and evaluation of the pilot project and any recommendations to improve the effectiveness of chapter      , Hawaii Revised Statutes.

     SECTION 4.  The public-private finance initiative shall neither plan nor implement any projects other than the pilot project identified in this Act nor enter into any agreements or contracts related to the planning or implementation of any projects other than the pilot project identified in this Act.

     SECTION 5.  There is appropriated out of the general revenues of the State of Hawaii the sum of $        or so much thereof as may be necessary for fiscal year 2014-2015 for:

     (1)  The establishment and operation of the public-private finance initiative pursuant to section 1 of this Act; and

     (2)  The funding of three staff positions.

     The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

     SECTION 6.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 7.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 8.  This Act shall take effect on July 1, 2050, and shall be repealed on July 1, 2018.

 

 

Report Title:

Public-private Finance Initiative; Pilot Project; Appropriation

 

Description:

Establishes the public-private finance initiative (PPIA).  Requires the PPIA to initiate a pilot project.  Appropriates funds for the PPIA.  Effective July 1, 2050.  Repeals on July 1, 2018.  (SB3066 HD1)

 

 

 

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