REPORT TITLE:
Convention Center; Privatize


DESCRIPTION:
Provides for the privatization of the convention center's debt
service through competitive contracting between the private
sector, the department of business, economic development, and
tourism, the convention center authority, and other governmental
entities.  Extends the convention center authority to 6/30/2001.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2358
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE CONVENTION CENTER.



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

 1      SECTION 1.  The legislature finds that "competitive
 
 2 contracting", also known as "managed competition", brings more
 
 3 responsive government.  Under competitive contracting, the public
 
 4 determines what services should be purchased and the
 
 5 specifications that should apply to the service.  The competitive
 
 6 market responds to the invitation of the government agency, and
 
 7 one or more service providers are selected to provide a specific
 
 8 service for a period of time.  The government and private sector
 
 9 entities compete for delivery of that service at the lowest cost
 
10 to the public.  Government retains policy control and financial
 
11 scrutiny over the service, while the competitive market supplies
 
12 the service.
 
13      The legislature finds that the management of the convention
 
14 center's debt service by the convention center authority has
 
15 become increasingly costly and inefficient.  The convention
 
16 center is essentially a "loss leader" -- it is essentially a
 
17 valuable commodity that is marketed at a loss in order to attract
 
18 visitors to Hawaii.  The convention center has brought a number
 
19 of well-publicized conventions to the State, bringing in needed
 

 
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 1 cash to struggling hotels, restaurants, retailers, and other
 
 2 tourism-related ventures on Oahu and around the State, as
 
 3 conventioneers have taken side-trips to the Neighbor Islands.
 
 4      Nevertheless, this positive spill-over effect for Hawaii's
 
 5 economy does not erase the fact that the convention center does
 
 6 not produce a positive cash flow.  Approximately $350,000,000 in
 
 7 debt has been incurred for the project.  This works out to about
 
 8 $27,000,000 in mortgage debt and the balance in operating losses,
 
 9 amounting to some $30,000,000 to $32,000,000 in red ink each
 
10 year.  These losses are currently covered by transient
 
11 accommodation tax and general excise tax revenues.
 
12      The legislature has already enacted a law to require the
 
13 development of a convention center privatization plan for this
 
14 purpose.  Act 124, Session Laws of Hawaii 1997, required the
 
15 department of business, economic development, and tourism to work
 
16 with the department of budget and finance and the convention
 
17 center authority to develop a convention center privatization
 
18 plan, which was to essentially privatize the convention center's
 
19 debt service.  That plan was apparently never completed.
 
20      The legislature believes that privatizing the convention
 
21 center's debt service will produce positive results, essentially
 
22 by turning around a losing proposition.  What is needed is a
 
23 private contractor -- or a public sector entity competing with
 

 
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 1 the private sector -- to instill a fresh outlook on the center.
 
 2 The legislature further finds that the participation of the
 
 3 private sector through competitive contracting will help to
 
 4 provide comparable or better debt management services for
 
 5 significantly less than what the State presently spends.
 
 6      Accordingly, the purpose of this Act is to allow the private
 
 7 sector, the department of business, economic development, and
 
 8 tourism, or some other government entity, to manage the
 
 9 convention center's debt service in the most efficient and cost-
 
10 effective manner possible.  The legislature finds that
 
11 competitive contracting of the center's debt service has the
 
12 potential to save the State money, reduce the size of government,
 
13 provide jobs to the public, expand the current tax base, and
 
14 provide better service to the public.
 
15      The purpose of this Act is therefore to:
 
16      (1)  Provide for the privatization of the convention
 
17           center's debt service through competitive contracting;
 
18      (2)  Require the convention center authority, with the input
 
19           and approval of the department of budget and finance
 
20           and the Hawaii tourism authority, to award the contract
 
21           to the private company or government entity whose
 
22           proposal is responsive, responsible, and offers the
 
23           lowest cost;
 

 
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 1      (3)  Extend the sunset date of the convention center
 
 2           authority from June 30, 2000, to June 30, 2001; and
 
 3      (4)  Repeal the convention center capital and operations
 
 4           special fund and transfer the remaining balances in
 
 5           that fund to the general fund.
 
 6      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 7 a new chapter to be appropriately designated and to read as
 
 8 follows:
 
 9                             "CHAPTER
 
10                    COMPETITIVE CONTRACTING OF
 
11               THE CONVENTION CENTER'S DEBT SERVICE
 
12      §   -1 Definitions.  The following terms, whenever used or
 
13 referred to in this chapter, shall have the following meanings,
 
14 unless the context clearly requires a different meaning:
 
15      "Attributable fully allocated cost" means the operating and
 
16 capital costs of public services including direct, indirect, and
 
17 allocated costs minus the cost of any function not to be
 
18 competitively contracted.
 
19      "Debt service" means interest and principal repayments on
 
20 moneys borrowed or bonds issued at any time to finance the
 
21 construction of the convention center.
 
22      "Authority" means the convention center authority.
 
23      "Government entity" means the governments of the State or
 

 
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 1 counties or any public body corporate and politic.
 
 2      "Make or buy analysis" means a periodic analysis in which
 
 3 the costs of providing a public service are compared to the costs
 
 4 of producing it by a private vendor.  The process assumes the
 
 5 true costs of publicly and privately providing comparable public
 
 6 services are compared.
 
 7      "Petition of interest" means a good faith petition by a
 
 8 private provider indicating an interest in providing a public
 
 9 service under contract to a government entity at a cost less than
 
10 that if provided by the government entity.
 
11      "Public service" means the management of the debt service of
 
12 the convention center.
 
13      §   -2  Competitive contracting.(a)  The authority shall
 
14 perform a make or buy analysis covering the management of the
 
15 debt service of the convention center.
 
16      (b)  In addition to the make or buy analysis requirement in
 
17 subsection (a), the authority shall perform a make or buy
 
18 analysis for which it has received a qualifying petition of
 
19 interest from a private company pursuant to section    -4.
 
20      (c)  The authority shall retain full control of service
 
21 quantities, service specifications, standards, and any other
 
22 matters demonstrably related to the management of the debt
 
23 service of the convention center in a manner consistent with the
 

 
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 1 public interest.
 
 2      (d)  The authority shall fully comply with this section as
 
 3 soon as practicable, but shall in any case be in full compliance
 
 4 with its provisions within one year of enactment.
 
 5      §   -3 Free enterprise participation process.(a)  The
 
 6 authority shall establish a free enterprise participation
 
 7 process, including:
 
 8      (1)  Maintenance of a list of interested proposers, which
 
 9           shall include all organizations that have requested
 
10           inclusion on the list.  The authority shall advertise
 
11           for additions to the list at least annually;
 
12      (2)  Distribution to companies on the mailing list of
 
13           notices specifying dates and deadlines with respect to
 
14           the make or buy analysis and deadlines for submittal of
 
15           petitions of interest from private companies; and
 
16      (3)  An appeals process covering petitions of interest and
 
17           requests for proposals.
 
18      (b)  The free enterprise participation process shall seek
 
19 the widest possible participation of interested private companies
 
20 in the management of the debt service of the convention center.
 
21      §   -4 Petitions of interest.(a)  Private companies
 
22 interested in the management of the debt service of the
 
23 convention center under this chapter may file petitions of
 

 
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 1 interest subject to the free enterprise participation process of
 
 2 the authority.
 
 3      (b)  Petitions of interest shall include:
 
 4      (1)  A description of the public service that the private
 
 5           company would like to provide;
 
 6      (2)  A statement that the private company believes that it
 
 7           can provide the same public service, under contract to
 
 8           the authority, for a lower cost than the present cost;
 
 9      (3)  A description of the private company's financial
 
10           capacity to provide the public service; and
 
11      (4)  A description of the private company's technical
 
12           ability to provide the public service, especially
 
13           evidenced by identical, similar, or relevant services
 
14           provided by the company, whether under public
 
15           sponsorship or not.
 
16      (c)  Within ninety days, the authority shall determine
 
17 whether there is sufficient reason to believe that the private
 
18 company has the financial and technical ability to manage the
 
19 debt service of the convention center.
 
20      (d)  The authority shall make one of two findings with
 
21 respect to the petition of interest:
 
22      (1)  Certify the petition if the private company has
 
23           sufficient financial and technical ability to manage
 

 
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 1           the debt service of the convention center; or
 
 2      (2)  Deny the petition if the private company has
 
 3           insufficient financial or technical ability, or both,
 
 4           to manage the debt service of the convention center.
 
 5 The authority shall state its justification for this finding.
 
 6 However, if the authority has scheduled an immediate make or buy
 
 7 analysis for substantially the same public service specified in
 
 8 the petition of interest, it shall notify the petitioner that
 
 9 such an analysis has been scheduled, without making a finding on
 
10 the petition.
 
11      (e)  If the authority certifies the petition, the authority
 
12 shall undertake a make or buy analysis with respect to the public
 
13 service specified in the petition, at the first possible
 
14 opportunity within its schedule adopted under its free enterprise
 
15 participation process.
 
16      §   -5 Make or buy analysis and contracts.(a)  The make
 
17 or buy analysis shall be performed through the issuance and
 
18 evaluation of requests for proposals from private companies
 
19 solicited pursuant to chapter 103D, except as otherwise provided
 
20 in this chapter.
 
21      (b)  The authority shall seek the widest reasonable
 
22 distribution of each request for proposals, and at a minimum
 
23 shall send each request for proposals to each organization on the
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 interested proposers list and to each additional organization
 
 2 that requests the specific request for proposals.  The authority
 
 3 shall advertise each request for proposals within ten days of
 
 4 issuance.  Proposals submission shall be required no sooner than
 
 5 forty-five days after the request for proposals advertisement
 
 6 date.  A request for proposals shall clearly specify the public
 
 7 services to be procured and include a draft contract.  The
 
 8 authority may submit its own proposal in response to the request
 
 9 for proposals, subject to the terms and conditions later
 
10 specified.
 
11      (c)  The authority, with the input and approval of the
 
12 department of budget and finance and the Hawaii tourism
 
13 authority, shall award the contract to the private company or
 
14 government entity whose proposal is responsive, responsible, and
 
15 offers the lowest cost.  Upon awarding the contract, the
 
16 authority shall provide the following information to the private
 
17 company or government entity selected to manage the debt service
 
18 of the convention center pursuant to this chapter:
 
19      (1)  A schedule of debt service charges for general
 
20           obligation bonds or reimbursable general obligation
 
21           bonds issued by the State for purposes of the
 
22           convention center that are outstanding at the time a
 
23           contract is entered into for the assumption of the debt
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           service;
 
 2      (2)  The amount and interest rates of the bonds issued;
 
 3      (3)  The maturity dates of the bonds issued; and
 
 4      (4)  The methods of retirement.
 
 5      (d)  Any public service operated under competitive proposals
 
 6 on the effective date of this section or thereafter shall be
 
 7 subject to a new competitive proposal at least every ten years.
 
 8 Renewal options that extend a contract beyond ten years shall be
 
 9 prohibited.
 
10      (e)  In no case shall a public service operated under a
 
11 competitive proposal be returned to operation not subject to a
 
12 competitive proposal.
 
13      (f)  The authority shall not establish or impose any
 
14 requirement relating to salaries, wages, benefits, or labor union
 
15 representation, staffing levels, work rules, or other conditions
 
16 of employment of private company employees.  All contractors
 
17 shall comply with applicable federal and state labor laws.
 
18      (g)  The authority shall make capital facilities and
 
19 equipment available for operation under competitive proposals by
 
20 private companies to the maximum extent feasible, subject to
 
21 supervision of the authority.  Capital facilities and equipment
 
22 shall be denied use by private contractors only if they would
 
23 similarly be denied use by the authority itself if it were
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 awarded the contract.
 
 2      (h)  All contract prices shall be competitively determined
 
 3 through a request for proposals.  No change in contract payment
 
 4 amount to a private contractor or government entity shall be made
 
 5 except as specified in the contract.  Payment changes in a
 
 6 contract shall be limited to indices, escalators, deflators,
 
 7 changes in service level, and other expressly stated or
 
 8 calculable amounts, consistent with the request for proposals and
 
 9 the proposal of the private contractor or government entity
 
10 awarded the contract.
 
11      (i)  The authority may execute interim standby competitive
 
12 contracts with one or more private contractors to provide a
 
13 public service on an interim basis in the event that the
 
14 authority is required to do so by the public welfare.  Any public
 
15 service operated under a standby contract shall be subject to
 
16 competitive proposal within six months of the standby contract
 
17 service award.
 
18      (j)  The authority shall not make or be bound by any
 
19 contract, agreement, or assurance that restricts its ability to
 
20 comply with this chapter in any respect.
 
21      § -6 Internal government entity proposals.  A government
 
22 entity may compete to provide the public service subjected to
 
23 make or buy analysis by submitting its own proposal, provided
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 that the government entity:
 
 2      (1)  Must submit a sealed proposal three days before the
 
 3           advertised deadline for proposals and may not alter the
 
 4           proposal after that deadline.  The proposal shall be
 
 5           publicly opened and made public at the deadline;
 
 6      (2)  With regard to any labor provision assumed in the
 
 7           proposal, shall either specify the provision in
 
 8           currently effective labor contracts or execute it
 
 9           before the proposal deadline in a written and binding
 
10           agreement between the government entity and the
 
11           appropriate labor organization;
 
12      (3)  Shall take reasonable steps to ensure an objective and
 
13           fair evaluation process including prohibition of
 
14           proposal evaluation participation by personnel or
 
15           departments that were involved in preparing the
 
16           government entity's proposal;
 
17      (4)  Shall set its proposal price not less than its
 
18           attributable fully allocated cost for the service, and
 
19           shall not base its proposal price on part-time labor
 
20           provisions or other less costly labor provisions to a
 
21           greater percentage than those provisions are employed
 
22           in comparable positions within the government entity.
 
23           Its proposal price shall be consistent with currently
 

 
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 1           adopted budgets and financial plans;
 
 2      (5)  Shall not make or be bound by any contract, agreement,
 
 3           or assurance which creates or extends any form of
 
 4           obligation for continued employment or employee
 
 5           compensation, except for pensions, beyond the contract
 
 6           expiration date under the request for proposals for
 
 7           employees assigned to the service;
 
 8      (6)  Shall be bound by the same terms, conditions, and
 
 9           performance and other standards that would have applied
 
10           to a private provider awarded the contract under the
 
11           request for proposals; and
 
12      (7)  Shall not increase its costs at any point during the
 
13           contract period by an amount greater than that
 
14           specified for the corresponding period in the
 
15           government entity's proposal.  If the government
 
16           entity's cost performance is not in compliance with
 
17           this provision, the government entity shall issue a new
 
18           request for proposals for the public service within
 
19           ninety days.
 
20      § -7 Liability and sovereign immunity.(a)  The
 
21 contractor shall assume all liability arising under a contract
 
22 entered into pursuant to this chapter.
 
23      (b)  The sovereign immunity of the State shall not extend to
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 the contractor.  Neither the contractor nor the insurer of the
 
 2 contractor may plead the defense of sovereign immunity in any
 
 3 action arising out of the performance of the contract.
 
 4      (c)  Nothing in this chapter shall be construed to accord to
 
 5 any private provider of public services under this chapter or to
 
 6 a member of the public third party beneficiary status.
 
 7      §   -8  Insurance.  The contractor shall provide an adequate
 
 8 plan of insurance, as determined by an independent risk
 
 9 management or actuarial firm with demonstrated experience in
 
10 public liability for state governments.  In determining the
 
11 adequacy of the plan, the firm shall determine whether the
 
12 insurance is adequate to:
 
13      (1)  Fully indemnify the State from actions by third parties
 
14           against the contractor or the State as a result of the
 
15           contract;
 
16      (2)  Assure the contractor's ability to fulfill its contract
 
17           in all respects and to assure that the contractor is
 
18           not limited in this ability due to financial liability
 
19           that results from judgments;
 
20      (3)  Protect the State against claims arising as the result
 
21           of any occurrence during the term of the contract on an
 
22           occurrence basis; and
 
23      (4)  Satisfy other requirements specified by the independent
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           risk management or actuarial firm.
 
 2      § -9 Termination of contract and resumption of control.
 
 3 (a)  The authority or contracting government entity, upon
 
 4 demonstration that a breach of contract has occurred and that
 
 5 after the passage of a reasonable period of time the breach has
 
 6 not been cured, without penalty to the contracting government
 
 7 entity, may cancel a contract to operate or manage any public
 
 8 service under this chapter at any time upon giving a six-month
 
 9 written notice.
 
10      (b)  Notwithstanding any other provision in this chapter to
 
11 the contrary, prior to entering into a contract for the provision
 
12 of a public service, a plan shall be developed by the contractor
 
13 and approved by the contracting governmental entity establishing
 
14 the method by which the state will resume control of the public
 
15 service upon contract termination.
 
16      (c)  Any contract entered into under this chapter shall
 
17 provide that upon declaration by executive order of the governor
 
18 of any material breach of contract on the part of the private
 
19 contractor, the authority, if necessary, may assume immediate
 
20 temporary control of the operation of the public service under
 
21 this chapter.
 
22      § -10  Rulemaking authority.  The authority shall adopt
 
23 rules necessary to carry out this chapter."
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      SECTION 3.  Section 36-27, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "§36-27  Transfers from special funds for central service
 
 4 expenses.  Except as provided in this section, and
 
 5 notwithstanding any other law to the contrary, from time to time
 
 6 the director of finance, for the purpose of defraying the
 
 7 prorated estimate of central service expenses of government in
 
 8 relation to all special funds, except the:
 
 9      (1)  Special summer school and intersession fund under
 
10           section 302A-1310;
 
11      (2)  School cafeteria special funds of the department of
 
12           education;
 
13      (3)  Special funds of the University of Hawaii;
 
14      (4)  State educational facilities improvement special fund;
 
15     [(5)  Convention center capital and operations special fund
 
16           under section 206X-10.5;
 
17      (6)] (5)  Special funds established by section 206E-6;
 
18     [(7)] (6)  Housing loan program revenue bond special fund;
 
19     [(8)] (7)  Housing project bond special fund;
 
20     [(9)] (8)  Aloha Tower fund created by section 206J-17;
 
21    [(10)] (9)  Domestic violence prevention special fund under
 
22           section 321-1.3;
 
23    [(11)] (10)  Spouse and child abuse special account under
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           section 346-7.5;
 
 2    [(12)] (11)  Spouse and child abuse special account under
 
 3           section 601-3.6;
 
 4    [(13)] (12)  Funds of the employees' retirement system created
 
 5           by section 88-109;
 
 6    [(14)] (13)  Unemployment compensation fund established under
 
 7           section 383-121;
 
 8    [(15)] (14)  Hawaii hurricane relief fund established under
 
 9           chapter 431P;
 
10    [(16)] (15)  Hawaii health systems corporation special funds;
 
11    [(17)] (16)  Boiler and elevator safety revolving fund
 
12           established under section 397-5.5;
 
13    [(18)] (17)  Tourism special fund established under section
 
14           201B-11;
 
15    [(19)] (18)  Department of commerce and consumer affairs'
 
16           special funds;
 
17    [(20)] (19)  Compliance resolution fund established under
 
18           section 26-9;
 
19    [(21)] (20)  Universal service fund established under chapter
 
20           269;
 
21    [(22)] (21)  Integrated tax information management systems
 
22           special fund under section 231-3.2;
 
23    [(23)] (22)  Insurance regulation fund under section 431:2-
 

 
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 1           215;
 
 2    [(24)] (23)  Hawaii tobacco settlement special fund under
 
 3           section 328L-2; and
 
 4    [(25)] (24)  Emergency budget and reserve fund under section
 
 5           328L-3;
 
 6 shall deduct five per cent of all receipts of all other special
 
 7 funds, which deduction shall be transferred to the general fund
 
 8 of the State and become general realizations of the State.  All
 
 9 officers of the State and other persons having power to allocate
 
10 or disburse any special funds shall cooperate with the director
 
11 in effecting these transfers.  To determine the proper revenue
 
12 base upon which the central service assessment is to be
 
13 calculated, the director shall adopt rules pursuant to chapter 91
 
14 for the purpose of suspending or limiting the application of the
 
15 central service assessment of any fund.  No later than twenty
 
16 days prior to the convening of each regular session of the
 
17 legislature, the director shall report all central service
 
18 assessments made during the preceding fiscal year."
 
19      SECTION 4.  Section 36-30, Hawaii Revised Statutes, is
 
20 amended by amending subsection (a) to read as follows:
 
21      "(a)  Each special fund, except the:
 
22      (1)  Transportation use special fund established by section
 
23           261D-1;
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      (2)  Special summer school and intersession fund under
 
 2           section 302A-1310;
 
 3      (3)  School cafeteria special funds of the department of
 
 4           education;
 
 5      (4)  Special funds of the University of Hawaii;
 
 6      (5)  State educational facilities improvement special fund;
 
 7      (6)  Special funds established by section 206E-6;
 
 8      (7)  Aloha Tower fund created by section 206J-17;
 
 9      (8)  Domestic violence prevention special fund under section
 
10           321-1.3;
 
11      (9)  Spouse and child abuse special account under section
 
12           346-7.5;
 
13     (10)  Spouse and child abuse special account under section
 
14           601-3.6;
 
15     (11)  Funds of the employees' retirement system created by
 
16           section 88-109;
 
17     (12)  Unemployment compensation fund established under
 
18           section 383-121;
 
19     (13)  Hawaii hurricane relief fund established under chapter
 
20           431P;
 
21    [(14)  Convention center capital and operations special fund
 
22           established under section 206X-10.5;
 
23     (15)] (14)  Hawaii health systems corporation special funds;
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1    [(16)] (15)  Tourism special fund established under section
 
 2           201B-11;
 
 3    [(17)] (16)  Compliance resolution fund established under
 
 4           section 26-9;
 
 5    [(18)] (17)  Universal service fund established under chapter
 
 6           269;
 
 7    [(19)] (18)  Integrated tax information management systems
 
 8           special fund;
 
 9    [(20)] (19)  Insurance regulation fund under section 431:2-
 
10           215;
 
11    [(21)] (20)  Hawaii tobacco settlement special fund under
 
12           section 328L-2; and
 
13    [(22)] (21)  Emergency and budget reserve fund under section
 
14           328L-3;
 
15 shall be responsible for its pro rata share of the administrative
 
16 expenses incurred by the department responsible for the
 
17 operations supported by the special fund concerned."
 
18      SECTION 5.  Section 206X-4, Hawaii Revised Statutes, is
 
19 amended by amending subsection (b) to read as follows:
 
20      "(b)  Except as otherwise limited by this chapter, the
 
21 authority also may:
 
22      (1)  Sue and be sued;
 
23      (2)  Have a seal and alter the same at pleasure;
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      (3)  Make and execute contracts and all other instruments
 
 2           necessary or convenient for the exercise of its powers
 
 3           and functions under this chapter;
 
 4      (4)  Make and alter bylaws for its organization and internal
 
 5           management;
 
 6      (5)  Adopt rules in accordance with chapter 91 with respect
 
 7           to its projects, operations, properties, and
 
 8           facilities;
 
 9      (6)  Through its executive director appoint officers,
 
10           agents, and employees, prescribe their duties and
 
11           qualifications, and fix their salaries, without regard
 
12           to chapters 76 and 77;
 
13      (7)  Review and approve the convention center development
 
14           plan proposed by a developer, for the convention center
 
15           district; inspect and approve development within the
 
16           convention center district for compliance with
 
17           convention center development plans and rules; and upon
 
18           construction of the convention center facility, manage,
 
19           operate, and maintain or enter into contracts for the
 
20           professional management, operation, and maintenance of
 
21           the convention center facility;
 
22      (8)  Cause a developer to prepare plans, specifications, and
 
23           designs for the construction, reconstruction,
 

 
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 1           rehabilitation, improvement, alteration, or repair of
 
 2           any project, and from time to time, to modify such
 
 3           plans, specifications, or designs; provided that the
 
 4           plans, specifications, or designs shall be subject to
 
 5           review and approval by the authority;
 
 6      (9)  Procure insurance against any loss and any liability in
 
 7           connection with the convention center and other related
 
 8           assets and operations in such amounts and from such
 
 9           insurers as it deems desirable;
 
10     (10)  Contract for and accept gifts or grants in any form
 
11           from any public agency, or any other source;
 
12     (11)  Upon the request of the authority and the approval of
 
13           the governor, condemn any real property interests as
 
14           the authority deems necessary for the development of a
 
15           convention center pursuant to chapter 101; provided
 
16           that the valuation of any such property acquired
 
17           pursuant to the exercise of the authority's power under
 
18           this subsection shall be done without regard to any
 
19           increase or decrease in the value of the property
 
20           resulting from the application of this chapter.
 
21           Property acquired by condemnation shall not be subject
 
22           to chapter 171;
 
23     (12)  Negotiate with the developer for contribution by the
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           developer to defray costs relating to the relocation of
 
 2           persons displaced because of the development;
 
 3     (13)  On behalf of the State, accept the authority to
 
 4           operate, manage, and maintain the convention center
 
 5           facility upon completion or acquisition of such
 
 6           facility;
 
 7     (14)  Issue revenue bonds, subject to the approval of the
 
 8           legislature.  All revenue bonds shall be issued
 
 9           pursuant to part III of chapter 39, except as provided
 
10           in this chapter.  All revenue bonds shall be issued in
 
11           the name of the authority and not in the name of the
 
12           State.  The final maturity date of the revenue bonds
 
13           may be any date not exceeding thirty years from the
 
14           date of issuance;
 
15     (15)  Pledge or assign all or any part of the receipts and
 
16           revenues of the authority;
 
17     (16)  Set and collect rents, fees, charges, or other payments
 
18           for the lease, use, occupancy, or disposition of the
 
19           convention center facility acquired, constructed, or
 
20           reconstructed by the authority pursuant to this
 
21           chapter; provided that the authority may waive or
 
22           substantially discount any rent, fee, charge, or other
 
23           payment at an open public meeting subject to the
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           requirement of chapter 92 for a specific event whenever
 
 2           the authority determines that the waiver or discount is
 
 3           in the best interest of the convention center facility
 
 4           or the State by attracting new tourist markets or
 
 5           conventioneers;
 
 6     (17)  Acquire, lease as lessee or lessor, own, rent, hold,
 
 7           and dispose of real and personal property in the
 
 8           exercise of its powers and the performance of its
 
 9           duties under this chapter;
 
10     (18)  Acquire by purchase, lease, or otherwise, and develop,
 
11           construct, operate, own, manage, repair, reconstruct,
 
12           enlarge, or otherwise effectuate, either directly or
 
13           through developers, a convention center;
 
14     (19)  Reimburse the state general fund for debt service on
 
15           general obligation bonds or reimbursable general
 
16           obligation bonds issued by the State for purposes of
 
17           the convention center in accordance with a schedule
 
18           determined by the director of finance, with the
 
19           approval of the governor, as may be in the best
 
20           interest of the State; provided that the management of
 
21           the convention center's debt service shall be provided
 
22           in accordance with the competitive contracting
 
23           provisions under chapter    ;
 

 
Page 25                                                    2358
                                     H.B. NO.           
                                                        
                                                        

 
 1     (20)  Do any and all things necessary to carry out its
 
 2           purposes and exercise the powers given and granted in
 
 3           this chapter; and
 
 4     (21)  By itself, or in combination or association with
 
 5           qualified persons, by any form of request for
 
 6           proposals, as determined by the authority, any law to
 
 7           the contrary notwithstanding, solicit, accept, review,
 
 8           reject, modify, or approve proposals, and thereafter
 
 9           enter into agreements, for a convention center
 
10           development plan, and for the initiation, undertaking,
 
11           supervision and regulation of the design, development,
 
12           financing, operation and maintenance of a convention
 
13           center facility and any related developments."
 
14      SECTION 6.  Section 206X-7, Hawaii Revised Statutes, is
 
15 amended by amending subsection (c) to read as follows:
 
16      "(c)  As a further condition and consideration of the right
 
17 to develop the real property within the convention center
 
18 district under the agreement and pursuant to this chapter, the
 
19 developer shall pay a reasonable sum determined by the authority
 
20 as contribution for the payment of costs relating to:
 
21      (1)  The temporary or permanent relocation of existing
 
22           licensees and lessees, if any, who are displaced
 
23           because of the development within the convention center
 

 
Page 26                                                    2358
                                     H.B. NO.           
                                                        
                                                        

 
 1           district pursuant to the convention center development
 
 2           plan by the developer; or
 
 3      (2)  Settlement payments in lieu of payments provided under
 
 4           paragraph (1) to existing licensees and lessees, if
 
 5           any, who are displaced by the developer because of the
 
 6           development within the convention center district
 
 7           pursuant to the convention center development plan;
 
 8 provided that each displaced licensee or lessee shall have the
 
 9 option to select either relocation or a settlement payment.
 
10      Upon the approval by the authority of the relocation plan,
 
11 which shall be prepared and submitted by the developer to the
 
12 authority, the developer shall deliver to the authority for
 
13 deposit into the [convention center capital and operations
 
14 special] general fund the sum determined by the authority in the
 
15 form of a certified check, an irrevocable letter of credit, or
 
16 surety bond.  The sum determined by the authority shall be used
 
17 for the implementation of the relocation plan; provided that the
 
18 sum and all interest accrued thereon shall be refunded to the
 
19 developer in the event this chapter expires and becomes void.
 
20      The relocation plan shall include an agreement by the
 
21 developer to give every displaced licensee or lessee who does not
 
22 elect to receive a settlement payment under paragraph (2) an
 
23 unassignable right of first refusal of any license or lease of
 

 
Page 27                                                    2358
                                     H.B. NO.           
                                                        
                                                        

 
 1 space within the convention center district developed and offered
 
 2 for those activities similar in size and nature to the business
 
 3 conducted by the licensee or lessee at the time of displacement,
 
 4 unless this right is waived by any licensee or lessee.
 
 5      The authority shall establish a task force to assist in the
 
 6 implementation of the relocation plan.  The task force shall
 
 7 include persons representing agencies, organizations, government,
 
 8 and private interests."
 
 9      SECTION 7.  Section 206X-10.5, Hawaii Revised Statutes, is
 
10 repealed.
 
11      ["§206X-10.5  Convention center capital and operations
 
12 special fund.(a)  There is established in the state treasury
 
13 the convention center capital and operations special fund, into
 
14 which shall be deposited:
 
15      (1)  A portion of the revenues from the transient
 
16           accommodations tax, as provided by section 237D-6.5;
 
17      (2)  All proceeds from revenue bonds issued by the
 
18           authority;
 
19      (3)  Appropriations by the legislature;
 
20      (4)  All net revenues or moneys derived from the operations
 
21           or use of the convention center;
 
22      (5)  All or a portion of all net revenues derived from the
 
23           operation of parking and garage facilities and other
 

 
Page 28                                                    2358
                                     H.B. NO.           
                                                        
                                                        

 
 1           concessions at the convention center; and
 
 2      (6)  All or a portion of all net revenues derived from the
 
 3           food and beverage operations at the convention center
 
 4           facility.
 
 5      (b)  In addition to the powers of the authority specified in
 
 6 section 206X-4, the authority may:
 
 7      (1)  Adopt rules in accordance with chapter 91, to define
 
 8           the term "net revenues or moneys derived from the
 
 9           operations or use of the convention center"; and
 
10      (2)  Do any and all things deemed necessary to administer
 
11           the convention center capital and operations special
 
12           fund.
 
13      (c)  Moneys in the convention center capital and operations
 
14 special fund may be placed in interest-bearing accounts or
 
15 otherwise invested by the authority until such time as the moneys
 
16 may be needed.  All interest accruing from the investment of
 
17 these moneys shall be credited to the convention center capital
 
18 and operations special fund.
 
19      (d)  Moneys in the convention center capital and operations
 
20 special fund shall be used by the authority for the following
 
21 purposes:
 
22      (1)  Planning, design, improvement, construction, land
 
23           acquisition, equipment, and furnishing necessary for
 

 
Page 29                                                    2358
                                     H.B. NO.           
                                                        
                                                        

 
 1           the development or maintenance of a convention center;
 
 2      (2)  Constructing the convention center and any public
 
 3           facilities related thereto;
 
 4      (3)  Payment of debt service on revenue bonds issued by the
 
 5           authority for purposes of the convention center,
 
 6           establishment of debt service and other reserves deemed
 
 7           necessary by the authority or the State, and
 
 8           reimbursement of the state general fund for debt
 
 9           service on general obligation bonds or reimbursable
 
10           general obligation bonds issued by the State for
 
11           purposes of the convention center;
 
12      (4)  Operation, maintenance, and improvement of the
 
13           convention center and any public facilities related
 
14           thereto; and
 
15      (5)  Any other purpose deemed necessary by the authority for
 
16           the purpose of planning, improving, and developing the
 
17           convention center facility."]
 
18      SECTION 8.  Section 237D-6.5, Hawaii Revised Statutes, is
 
19 amended by amending subsection (b) to read as follows:
 
20      "(b)  Beginning on January 1, 1999, revenues collected under
 
21 this chapter shall be distributed as follows:
 
22      (1)  17.3 per cent of the revenues collected under this
 
23           chapter shall be deposited into the [convention center
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           capital and operations special] general fund
 
 2           [established under section 206X-10.5];
 
 3      (2)  37.9 per cent of the revenues collected under this
 
 4           chapter shall be deposited into the tourism special
 
 5           fund established under section 201B-11;
 
 6      (3)  44.8 per cent of the revenues collected under this
 
 7           chapter shall be transferred as follows:  Kauai county
 
 8           shall receive 14.5 per cent[;], Hawaii county shall
 
 9           receive 18.6 per cent, city and county of Honolulu
 
10           shall receive 44.1 per cent, and Maui county shall
 
11           receive 22.8 per cent.
 
12      All transient accommodations taxes shall be paid into the
 
13 state treasury each month within ten days after collection, and
 
14 shall be kept by the state director of finance in special
 
15 accounts for distribution as provided in this subsection."
 
16      SECTION 9.  Act 96, Session Laws of Hawaii 1988, as amended
 
17 by Act 159, Session Laws of Hawaii 1992, Act 241, Session Laws of
 
18 Hawaii 1993, Act 75, Session Laws of Hawaii 1994, Act 156,
 
19 Session Laws of Hawaii 1998, and Act 98, Session Laws of Hawaii
 
20 1999, is amended by amending section 3 to read as follows:
 
21      "SECTION 3.  This Act shall automatically expire on June 30,
 
22 [2000.] 2001.  The auditor shall continue to audit and monitor
 
23 the progress made by the convention center authority in resolving
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 various outstanding issues and problems so as to assure the
 
 2 legislature that these issues have been addressed on or before
 
 3 June 30, 2000.  By February 28, 2000, the auditor shall submit a
 
 4 management audit report to the legislature on the effectiveness
 
 5 of the steps taken by the convention center authority to resolve
 
 6 traffic, noise, and other outstanding claims against the
 
 7 authority.  The management audit may include financial audit
 
 8 issues that the auditor deems appropriate.
 
 9      In the event any judicial or quasi-judicial proceeding is
 
10 commenced regarding the validity of this Act or any section of
 
11 this Act, or any action of the authority, the running of the
 
12 period shall be suspended until a final nonappealable
 
13 determination is made in the judicial or quasi-judicial
 
14 proceeding."
 
15      SECTION 10.  All contracts entered into under statutes or
 
16 portions of statutes amended by this Act shall continue to be
 
17 honored until their termination.  The provisions of this Act
 
18 shall not be applied so as to impair any contract existing as of
 
19 the effective date of this Act or to otherwise be deemed to
 
20 violate either the Hawaii Constitution or Article I, section 10,
 
21 of the United States Constitution.
 
22      SECTION 11.  The director of finance shall transfer the
 
23 unexpended balance, including encumbrances and accrued
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 liabilities, of the convention center capital and operations
 
 2 special fund as of the close of business on June 29, 2000, to the
 
 3 credit of the general fund.  Encumbered moneys shall continue to
 
 4 be encumbered until paid out or released from prior encumbrances.
 
 5      SECTION 12.  Statutory material to be repealed is bracketed.
 
 6 New statutory material is underscored.
 
 7      SECTION 13.  This Act shall take effect on June 29, 1999;
 
 8 provided that:
 
 9      (1)  Section 7 of this Act shall take effect on June 30,
 
10           1999; and
 
11      (2)  The amendments made to section 36-27, Hawaii Revised
 
12           Statutes, by section 3 of this Act shall not be
 
13           repealed when that section is reenacted on July 31,
 
14           2003, pursuant to section 9 of Act 142, Session Laws of
 
15           Hawaii 1998.
 
16 
 
17                           INTRODUCED BY:_________________________