REPORT TITLE:


DESCRIPTION:



 
a                                                     HTH-16(00)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2532
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO HAWAII HEALTH SYSTEMS CORPORATION.



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

 1      SECTION 1.  Hawaii Health systems corporation is authorized
 
 2 to issue $38,000,000 in revenue bonds under Act 116 Hawaii
 
 3 Session Laws 1998 (Item 13P, page 369).  The legislature finds
 
 4 that Hawaii health systems corporation is unable to issue the
 
 5 revenue bonds without those bonds being secured by a guaranty
 
 6 from the State.
 
 7      The legislature finds and declares that the issuance of bond
 
 8 guarantees under this Act is in the public interest and for the
 
 9 public health, safety, and general welfare of the State.
 
10      SECTION 2.  Bonds guaranteed by the department.  (a)  The
 
11 department of budget and finance, through its director, may
 
12 guaranty payment of principal of and interest on bonds issued by
 
13 Hawaii Health systems corporation under section 323F-7, Hawaii
 
14 Revised Statutes, by guaranteeing payment of principal of and
 
15 interest on the bonds or by guaranteeing the provider of any
 
16 credit facility securing the bonds to reimburse any amounts drawn
 
17 on such credit facility to pay principal of or interest on the
 
18 bonds.  The amount of liability under the guaranty shall not
 

 
a                                                     HTH-16(00)
Page 2                                                     2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 exceed $47,500,000.
 
 2      (b)  The terms for the guaranty shall include a requirement
 
 3 that the Hawaii Health systems corporation deposit and maintain,
 
 4 in a trust fund to be established and held by the department or
 
 5 by a bank trustee on behalf of the department an amount equal to
 
 6 the lesser of maximum annual debt service on, or one hundred
 
 7 twenty-five per cent of average annual debt service on, or ten
 
 8 per cent of the principal amount at issuance of, the bonds
 
 9 guaranteed.  If the interest rate on the bonds is variable, an
 
10 assumed interest rate or formula determined by the department
 
11 shall be used in calculating the balance required to be
 
12 maintained in the trust fund.  This deposit may be made from
 
13 proceeds of the bonds or any other available funds of Hawaii
 
14 Health systems corporation.  Amounts in the trust fund shall be
 
15 invested by the department in any securities in which proceeds of
 
16 the bonds may be invested and shall be held in trust for the
 
17 benefit of the State and pledged to payment of principal of and
 
18 interest on the bonds prior to any payment under the guaranty.
 
19 In the event of default by Hawaii Health systems corporation in
 
20 payment of any amount in respect of debt service on guaranteed
 
21 bonds, the trustee for the guaranteed bonds shall notify the
 
22 department of the default and shall be entitled to any amounts in
 

 
a                                                     HTH-16(00)
 
Page 3                                                     2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 the trust fund necessary to cure the default and, to the extent
 
 2 such amounts are not sufficient, to take all steps necessary or
 
 3 appropriate to collect the amounts necessary to cure the default
 
 4 pursuant to the guaranty or any applicable credit facility (in
 
 5 which case the credit provider shall be entitled to reimbursement
 
 6 pursuant to the guaranty).  In the event of any transfer of
 
 7 amounts in the trust fund to the trustee for the guaranteed bonds
 
 8 (or to the credit facility provider) due to any deficiency in
 
 9 payment from Hawaii Health systems corporation, the department
 
10 shall seek an appropriation or appropriations from the
 
11 legislature in such amounts and at such times as the department
 
12 determines to be necessary or agrees pursuant to its guaranty in
 
13 order to fund the guaranty or the trust fund.  Amounts remaining
 
14 in the trust fund may be used for final payment of the bonds on
 
15 maturity or early redemption or acceleration and to the extent
 
16 not so used shall be returned to Hawaii Health systems
 
17 corporation after all guaranteed bonds have been paid.  Amounts
 
18 in the trust fund in excess of the required balance, from time to
 
19 time, shall be returned to the Hawaii Health systems corporation
 
20 subject to any other agreement with bondholders, credit
 
21 providers, or the department.  Appropriations received by the
 
22 department pursuant to this Section may be added to the trust
 

 
a                                                     HTH-16(00)
 
Page 4                                                     2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 fund or held by or on behalf of the department in a supplemental
 
 2 trust fund in order to maintain the aggregate balance in the
 
 3 trust fund or funds at the required amount.  To the extent not
 
 4 used to make payments under the guaranty, such appropriations
 
 5 (including any earnings thereon) shall be returned to the State
 
 6 when the Hawaii health systems corporation returns the trust fund
 
 7 to the required balance with its own funds or after all
 
 8 guaranteed bonds have been paid in full.
 
 9      (c)  The department may set additional terms and conditions
 
10 on the granting of the guaranty, which may include requiring
 
11 Hawaii Health systems corporation (and in such event,
 
12 notwithstanding any other provision of law, Hawaii Health systems
 
13 corporation is authorized) to pledge, mortgage, grant a security
 
14 interest in, sell, assign, lease, or otherwise dispose of any or
 
15 all property, whether real, personal or mixed, tangible or
 
16 intangible, and of any interest therein, to secure payment of
 
17 principal of any interest on the bonds or reimbursement to the
 
18 provider of any credit facility securing the bonds or
 
19 reimbursement to the State, of any payments made pursuant to the
 
20 credit facility or the State guaranty, as the case may be.
 
21      SECTION 3.  Pursuant to Article VII, section 13, clause 8,
 
22 of the State Constitution that states:  "Bonds constituting
 

 
a                                                     HTH-16(00)
 
Page 5                                                     2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 instruments of indebtedness under which the State or any
 
 2 political subdivision incurs a contingent liability as a
 
 3 guarantor, but only to the extent the principal amount of such
 
 4 bonds does not exceed seven percent of the principal amount of
 
 5 outstanding general obligation bonds not otherwise excluded under
 
 6 this section; provided that the State or political subdivision
 
 7 shall establish and maintain a reserve in an amount in reasonable
 
 8 proportion to the outstanding loans guaranteed by the State or
 
 9 political subdivision as provided by law", the legislature finds
 
10 and declares that the moneys deposited into the trust fund or
 
11 funds, pursuant to section 2(c) of this Act, satisfies the
 
12 reasonable reserve requirement of the State Constitution.
 
13      SECTION 4.  Declaration of findings with respect to the
 
14 general obligation bonds authorized by this Act.  Pursuant to the
 
15 clause in Article VII, Section 13 of the State Constitution which
 
16 states: "Effective July 1, 1980, the legislature shall include a
 
17 declaration of findings in every general law authorizing the
 
18 issuance of general obligation bonds that the total amount of
 
19 principal and interest, estimated for such bonds and for all
 
20 bonds authorized and unissued and calculated for all bonds issued
 
21 and outstanding, will not cause the debt limit to be exceeded at
 
22 the time of issuance," the legislature finds and declares as
 

 
a                                                     HTH-16(00)
 
Page 6                                                     2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 follows:
 
 2      (1)  Limitation on general obligation debt.  The debt limit
 
 3 of the state is set forth in Article VII, Section 13 of the State
 
 4 Constitution, which states in part: "General obligation bonds may
 
 5 be issued by the State; provided that such bonds at the time of
 
 6 issuance would not cause the total amount of principal and
 
 7 interest payable in the current or any future fiscal year,
 
 8 whichever is higher, on such bonds and on all outstanding general
 
 9 obligation bonds to exceed: a sum equal to twenty percent of the
 
10 average of the general fund revenues of the State in the three
 
11 fiscal years immediately preceding such issuance until June 30,
 
12 1982; and thereafter, a sum equal to eighteen and one-half
 
13 percent of the average of the general fund revenues of the State
 
14 in the three fiscal years immediately preceding such issuance."
 
15 Article VII, Section 13 also provides that in determining the
 
16 power of the State to issue general obligation bonds, certain
 
17 bonds are excludable, including "reimbursable general obligation
 
18 bonds issued for a public undertaking, improvement or system but
 
19 only to the extent that reimbursements to the general fund are in
 
20 fact made from the net revenue, or net user tax receipts, or
 
21 combination of both, as determined for the immediately preceding
 
22 fiscal year and bonds constituting instruments of indebtedness
 

 
a                                                     HTH-16(00)
 
Page 7                                                     2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 under which the State incurs a contingent liability as a
 
 2 guarantor, but only to the extent the principal amount of such
 
 3 bonds does not exceed seven percent of the principal amount of
 
 4 outstanding general obligation bonds not otherwise excluded under
 
 5 said Article VII, Section 13.
 
 6      (2)  Actual and estimated debt limits.  The limit on
 
 7 principal and interest of general obligation bonds issued by the
 
 8 State, actual for fiscal year 1999-2000 and estimated for each
 
 9 fiscal year from 2000-2001 to 2002-2003, is as follows:
 
10          Fiscal           Net General          Debt Limit
 
11           Year           Fund Revenues
 
12        1996-1997         3,115,264,737
 
13        1997-1998         3,195,967,036
 
14        1998-1999         3,254,256,686
 
15        1999-2000         3,087,808,000      $589,871,788
 
16        2000-2001         3,137,140,000       588,178,623
 
17        2001-2002         3,153,478,000       584,550,956
 
18        2002-2003         (not applicable)    578,336,270
 
19 For fiscal years 1999-2000, 2000-2001, 2001-2002 and 2002-2003
 
20 respectively, the debt limit is derived by multiplying the
 
21 average of the net general fund revenues for the three preceding
 
22 fiscal years by eighteen and one-half per cent.  The net general
 

 
a                                                     HTH-16(00)
 
Page 8                                                     2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 fund revenues for fiscal years 1996-1997, 1997-1998, and 1998-
 
 2 1999 are actual, as certified by the director of finance in the
 
 3 Statement of the Debt Limit of the State of Hawaii as of July 1,
 
 4 1999, dated November 24, 1999.  The net general fund revenues for
 
 5 fiscal years 1999-2000 to 2001-2002 are estimates, based on
 
 6 general fund revenue estimates made as of September 3, 1999, by
 
 7 the council on revenues, the body assigned by Article VII,
 
 8 Section 7 of the State Constitution to make such estimates, and
 
 9 based on estimates made by the department of budget and finance
 
10 of those receipts which cannot be included as general fund
 
11 revenues for the purpose of calculating the debt limit, all of
 
12 which estimates the legislature finds to be reasonable.
 
13      (3)  Principal and interest on outstanding bonds applicable
 
14 to the debt limit. (A) According to the department of budget and
 
15 finance, the total amount of principal and interest on
 
16 outstanding general obligation bonds, after the exclusions
 
17 permitted by Article VII, Section 13 of the State Constitution,
 
18 for determining the power of the State to issue general
 
19 obligation bonds within the debt limit as of December 1, 1999 is
 
20 as follows for fiscal year 2000-2001 to fiscal year 2006-2007:   
 
21                     Fiscal           Principal
 
22                      Year          and Interest
 

 
a                                                     HTH-16(00)
 
Page 9                                                     2532
                                     H.B. NO.           
                                                        
                                                        

 
 1                     2000-2001      $352,508,780
 
 2                     2001-2002       367,994,493
 
 3                     2002-2003       411,701,970
 
 4                     2003-2004       378,223,219
 
 5                     2004-2005       373,053,164
 
 6                     2005-2006       347,383,328
 
 7                     2006-2007       344,154,560
 
 8 The department of budget and finance further reports that the
 
 9 amount of principal and interest on outstanding bonds applicable
 
10 to the debt limit generally continues to decline each year from
 
11 fiscal year 2007-2008 to fiscal year 2019-2020 when the final
 
12 installment of $27,612,984 shall be due and payable.  (B) The
 
13 department of budget and finance further reports that the
 
14 outstanding principal amount of bonds constituting instruments of
 
15 indebtedness under which the State may incur a contingent
 
16 liability as a guarantor is $191,000,000, all or part of which is
 
17 excludable in determining the power of the State to issue general
 
18 obligation bonds, pursuant to Article VII, section 13 of the
 
19 State Constitution.
 
20      (4)  Amount of authorized and unissued general obligation
 
21 bonds and guaranties and proposed bonds and guaranties.  (A) As
 
22 calculated from the state comptroller's bond fund report as of
 

 
a                                                     HTH-16(00)
 
Page 10                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 October 31, 1999, adjusted for (a) appropriations to be funded by
 
 2 general obligation bonds and reimbursable general obligation
 
 3 bonds as provided in Act 99, Session Laws of Hawaii 1999 (General
 
 4 Appropriations Act of 1999) to be expended in the fiscal year
 
 5 2000-2001; (b) appropriation to be funded by reimbursable general
 
 6 obligation bonds as provided in Act 151, Session Laws of Hawaii
 
 7 1999 (Relating to Hawaii Hurricane Relief Fund Bonds) to be
 
 8 expended in the fiscal year 2000-2001; and Act 156, Session Laws
 
 9 of Hawaii 1999 (Judiciary Appropriations Act of 1999) to be
 
10 expended in the fiscal year 2000-2001, the total amount of
 
11 authorized but unissued general obligation bonds is
 
12 $1,396,394,543.  (B) As reported by the department of budget and
 
13 finance the outstanding principal amount of bonds constituting
 
14 instruments of indebtedness under which the State may incur a
 
15 contingent liability as a guarantor is $191,000,000, all or part
 
16 of which is excludable in determining the power of the State to
 
17 issue general obligation bonds, pursuant to Article VII, Section
 
18 13 of the State Constitution.  The total amount of guaranties
 
19 authorized by this Act is $47,500,000 and are herein validated.
 
20 The total amount of guaranties previously authorized and
 
21 validated by this Act is $238,500,000.
 
22      (5)  Proposed general obligation bond issuance.  As reported
 

 
a                                                     HTH-16(00)
 
Page 11                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 therein for the fiscal years 1998-1999, 1999-2000, 2000-2001,
 
 2 2001-2002 and 2002-2003, the State proposed to issue $200,000,000
 
 3 in general obligation bonds during the remainder of fiscal year
 
 4 1999-2000, $350,000,000 during the first half of fiscal year
 
 5 2000-2001, $150,000,000 during the second half of fiscal year
 
 6 2000-2001, $150,000,000 during the first half of fiscal year 2001
 
 7 -2002, $150,000,000 during the second half of fiscal year 2001-
 
 8 2002, $100,000,000 during the first half of fiscal year 2002-
 
 9 2003, and $300,000,000 during the second half of fiscal year
 
10 2002-2003.  It has been the practice of the State to issue
 
11 twenty-year serial bonds with principal repayments beginning the
 
12 third year, the bonds payable in substantially equal annual
 
13 installments of principal and interest payment with interest
 
14 payments commencing six months from the date of issuance and
 
15 being paid semi-annually thereafter.  It is assumed that this
 
16 practice will continue to be applied to the bonds which are
 
17 proposed to be issued except that principal repayments will begin
 
18 in the fourth year.
 
19      (6)  Sufficiency of proposed general obligation bond
 
20 issuance to meet the requirements of authorized and unissued
 
21 bonds, as adjusted, and bonds authorized by this Act.  From the
 
22 schedule reported in paragraph (5), the total amount of general
 

 
a                                                     HTH-16(00)
 
Page 12                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 obligation bonds which the State proposes to issue during the
 
 2 fiscal years 1999-2000 to 2001-2002 is $1,000,000,000.  An
 
 3 additional $400,000,000 is proposed to be issued in fiscal year
 
 4 2002-2003.  The total amount of $1,000,000,000 which is proposed
 
 5 to be issued through fiscal year 2001-2002 is sufficient to meet
 
 6 the requirements of the authorized and unissued bonds, as
 
 7 adjusted, the total amount of which is $1,396,394,543, as
 
 8 reported in paragraph (4), except for $396,394,543.  It is
 
 9 assumed that the appropriations to which an additional
 
10 $396,394,543 in bond issuance needs to be applied will have been
 
11 encumbered as of June 30, 2002.  The $400,000,000 which is
 
12 proposed to be issued in fiscal year 2002-2003 will be sufficient
 
13 to meet the requirements of the June 30, 2002 encumbrances in the
 
14 amount of $396,394,543.  The amount of assumed encumbrances as of
 
15 June 30, 2002 is reasonable and conservative, based upon an
 
16 inspection of June 30 encumbrances of the general obligation bond
 
17 fund as reported by the state comptroller.  Thus, taking into
 
18 account the amount of authorized and unissued bonds, as adjusted,
 
19 and the bonds authorized by this Act versus the amount of bonds
 
20 which is proposed to be issued by June 30, 2002, and the amount
 
21 of June 30, 2002 encumbrances versus the amount of bonds which is
 
22 proposed to be issued in fiscal year 2002-2003, the legislature
 

 
a                                                     HTH-16(00)
 
Page 13                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 finds that in the aggregate, the amount of bonds which is
 
 2 proposed to be issued is sufficient to meet the requirements of
 
 3 all authorized and unissued bonds and the bonds authorized by
 
 4 this Act.
 
 5      (7)  Bonds excludable in determining the power of the State
 
 6 to issue bonds.  As noted in paragraph (1), certain bonds are
 
 7 excludable in determining the power of the State to issue general
 
 8 obligation bonds.  (A) General obligation reimbursable bonds can
 
 9 be excluded under certain conditions.
 
10      It is not possible to make a conclusive determination as to
 
11 the amount of reimbursable bonds which are excludable from the
 
12 amount of each proposed bond issued because:
 
13      (i)  It is not known exactly when projects for which
 
14 reimbursable bonds have been authorized in prior acts and in this
 
15 Act will be implemented and will require the application of
 
16 proceeds from a particular bond issue; and
 
17      (ii)  Not all reimbursable general obligation bonds may
 
18 qualify for exclusion.
 
19      However, the legislature notes that with respect to the
 
20 principal and interest on outstanding general obligation bonds,
 
21 according to the department of budget and finance, the average
 
22 proportion of principal and interest which is excludable each
 

 
a                                                     HTH-16(00)
 
Page 14                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 year from the calculation against the debt limit is 6.97 percent
 
 2 for the ten years from fiscal year 2000-2001 to fiscal year 2009-
 
 3 2010.  For the purpose of this declaration, the assumption is
 
 4 made that five percent of each bond issue will be excludable from
 
 5 the debt limit, an assumption which the legislature finds to be
 
 6 reasonable and conservative.  (B) Bonds constituting instruments
 
 7 of indebtedness under which the State incurs a contingent
 
 8 liability as a guarantor can be excluded but only to the extent
 
 9 the principal amount of such guaranties does not exceed seven
 
10 percent of the principal amount of outstanding general obligation
 
11 bonds not otherwise excluded under subparagraph (A) of this
 
12 paragraph (7) and provided that the State shall establish and
 
13 maintain a reserve in an amount in reasonable proportion to the
 
14 outstanding loans guaranteed by the State as provided by law.
 
15 According to the department of budget and finance and the
 
16 assumptions presented herein, the total principal amount of
 
17 outstanding general obligation bonds and general obligation bonds
 
18 proposed to be issued, which are not otherwise excluded under
 
19 Article VII, Section 13 of the State Constitution for the fiscal
 
20 years 1999-2000, 2000-2001, 2001- 2002 and 2002-2003 are as
 
21 follows:
 
22                Fiscal Year            Total Amount of
 

 
a                                                     HTH-16(00)
 
Page 15                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1                                      General Obligation Bonds
 
 2                                      not otherwise excluded by
 
 3                                      Article VII, section 13
 
 4                                      of the State Constitution
 
 5                1999-2000                  3,309,433,537
 
 6                2000-2001                  3,600,550,972
 
 7                2001-2002                  3,677,655,955
 
 8                2002-2003                  3,843,443,582
 
 9      Based on the foregoing and based on the assumption that the
 
10 full amount of a guaranty is immediately due and payable when
 
11 such guaranty changes from a contingent liability to an actual
 
12 liability, the aggregate principal amount of the portion of the
 
13 outstanding guaranties and the guaranties proposed to be
 
14 incurred, which does not exceed seven percent of the average
 
15 amount set forth in the last column of the above table and for
 
16 which reserve funds have been or will have been established as
 
17 heretofore provided, can be excluded in determining the power of
 
18 the State to issue general obligation bonds.  As it is not
 
19 possible to predict with a reasonable degree of certainty when a
 
20 guaranty will change from a contingent liability to an actual
 
21 liability, it is assumed in conformity with fiscal conservatism
 
22 and prudence, that all guaranties not otherwise excluded pursuant
 

 
a                                                     HTH-16(00)
 
Page 16                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 to Article VII, Section 13 of the State Constitution will become
 
 2 due and payable in the same fiscal year in which the greatest
 
 3 amount of principal and interest on general obligation bonds,
 
 4 after exclusions, occurs.  Thus, based on such assumptions and on
 
 5 the determination in paragraph (8), all of the outstanding
 
 6 guaranties can be excluded.
 
 7      (8)  Determination whether the debt limit will be exceeded
 
 8 at the time of issuance.  From the foregoing and on the
 
 9 assumption that all of the bonds identified in paragraph (5) will
 
10 be issued at an interest rate of 6.0 per cent, it can be
 
11 determined from the following schedule that the bonds which are
 
12 proposed to be issued, which include all authorized and unissued
 
13 bonds previously authorized, as adjusted, general obligation
 
14 bonds and instruments of indebtedness under which the State
 
15 incurs a contingent liability as a guarantor authorized in this
 
16 Act, will not cause the debt limit to be exceeded at the time of
 
17 such issuance:
 
18 Time of Issuance         Debt Limit       Greatest Amount
 
19 and Amount to be         at Time of         and Year of
 
20 Counted Against           Issuance        Highest Principal
 
21   Debt Limit                                and Interest
 
22                                        on Bonds and Guaranties
 

 
a                                                     HTH-16(00)
 
Page 17                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1 Remainder FY 1999-2000
 
 2 $190,000,000             589,871,788   423,101,970 (2002-2003)
 
 3 1st half FY 2000-2001
 
 4 $332,500,000             588,178,623   443,051,970 (2002-2003)
 
 5 2nd half FY 2000-2001
 
 6 $142,500,000             588,178,623   451,601,970 (2002-2003)
 
 7 1st half FY 2001-2002
 
 8 $142,500,000             584,550,956   455,876,970 (2002-2003)
 
 9 2nd half FY 2001-2002
 
10 $142,500,000             584,500,956   464,426,970 (2002-2003)
 
11 1st half FY 2002-2003
 
12 $95,000,000              578,336,270   549,374,614 (2004-2005)
 
13 2nd half FY 2002-2003
 
14 $285,000,000             578,336,270   479,324,614 (2004-2005)
 
15      (9)  Overall and concluding finding.  From the facts,
 
16 estimates, and assumptions stated in this declaration of
 
17 findings, the conclusion is reached that the total amount of
 
18 principal and interest estimated for the general obligation bonds
 
19 authorized in this Act, and for all bonds authorized and
 
20 unissued, and calculated for all bonds issued and outstanding,
 
21 and all guaranties, will not cause the debt limit to be exceeded
 
22 at the time of issuance.
 

 
a                                                     HTH-16(00)
 
Page 18                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1      SECTION 5.  The legislature finds the bases for the
 
 2 declaration of findings set forth in this Act reasonable.  The
 
 3 assumptions set forth in this Act with respect to the principal
 
 4 amount of general obligation bonds which will be issued, the
 
 5 amount of principal and interest on reimbursable general
 
 6 obligation bonds which are assumed to be excludable, and the
 
 7 assumed maturity structure shall not be deemed to be binding, it
 
 8 being the understanding of the legislature that such matters must
 
 9 remain subject to substantial flexibility.
 
10      SECTION 6.  Section 323F-7, Hawaii Revised Statutes, is
 
11 amended by amending subsection (a) to read as follows:
 
12      "(a)  Notwithstanding any other law to the contrary, the
 
13 corporation shall have and exercise the following duties and
 
14 powers:
 
15      (1)  Developing its own policies, procedures, and rules
 
16           necessary or appropriate to plan, operate, manage, and
 
17           control the system of public health facilities and
 
18           services without regard to chapter 91;
 
19      (2)  Evaluating the need for health facilities and services;
 
20      (3)  Entering into and performing any contracts, leases,
 
21           cooperative agreements, or other transactions
 
22           whatsoever that may be necessary or appropriate in the
 

 
a                                                     HTH-16(00)
 
Page 19                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1           performance of its purposes and responsibilities, and
 
 2           on terms it may deem appropriate, with either:
 
 3           (A)  Any agency or instrumentality of the United
 
 4                States, or with any state, territory, or
 
 5                possession, or with any subdivision thereof; or 
 
 6           (B)  Any person, firm, association, or corporation,
 
 7                whether operated on a for-profit or not-for-
 
 8                profit basis;
 
 9           provided that the transaction furthers the public
 
10           interest;
 
11      (4)  Conducting activities and entering into business
 
12           relationships as the corporation board deems necessary
 
13           or appropriate, including but not limited to:
 
14      (A)  Creating nonprofit corporations, including but not
 
15           limited to charitable fund-raising foundations, to be
 
16           controlled wholly by the corporation or jointly with
 
17           others;
 
18      (B)  Establishing, subscribing to, and owning stock in
 
19           business corporations individually or jointly with
 
20           others; and
 
21      (C)  Entering into partnerships and other joint venture
 
22           arrangements, or participating in alliances, purchasing
 

 
a                                                     HTH-16(00)
 
Page 20                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1           consortia, health insurance pools, or other cooperative
 
 2           arrangements, with any public or private entity;
 
 3           provided that any corporation, venture, or relationship
 
 4           entered into under this section furthers the public
 
 5           interest; provided further that this paragraph shall
 
 6           not be construed to authorize the corporation to
 
 7           abrogate any responsibility or obligation under
 
 8           paragraph (15);
 
 9      (5)  Participating in and developing prepaid health care
 
10           service and insurance programs and other alternative
 
11           health care delivery programs, including programs
 
12           involving the acceptance of capitated payments or
 
13           premiums that include the assumption of financial and
 
14           actuarial risk;
 
15      (6)  Executing, in accordance with all applicable bylaws,
 
16           rules, and laws, all instruments necessary or
 
17           appropriate in the exercise of any of the corporation's
 
18           powers;
 
19      (7)  Preparing and executing all corporation budgets,
 
20           policies, and procedures;
 
21      (8)  Setting rates and charges for all services provided by
 
22           the corporation without regard to chapter 91;
 

 
a                                                     HTH-16(00)
 
Page 21                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1      (9)  Developing a corporation-wide hospital personnel system
 
 2           that is subject to chapters 76, 77, and 89;
 
 3     (10)  Developing the corporation's capital and strategic
 
 4           plans;
 
 5     (11)  Suing and being sued; provided that the corporation
 
 6           shall enjoy the same sovereign immunity available to
 
 7           the State;
 
 8     (12)  Making and altering corporation board bylaws for its
 
 9           organization and management without regard to chapter
 
10           91;
 
11     (13)  Adopting rules, without regard to chapter 91, governing
 
12           the exercise of its powers and the fulfillment of its
 
13           purpose under this chapter;
 
14     (14)  Entering into any contract or agreement whatsoever, not
 
15           inconsistent with this chapter or the laws of this
 
16           State, and authorizing the corporation chief executive
 
17           officer to enter into all contracts, execute all
 
18           instruments, and do all things necessary or appropriate
 
19           in the exercise of the powers granted in this chapter,
 
20           including securing the payment of bonds;
 
21     (15)  Issuing revenue bonds subject to the approval of the
 
22           legislature; provided that all revenue bonds shall be
 

 
a                                                     HTH-16(00)
 
Page 22                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1           issued pursuant to part III, chapter 39;
 
 2     (16)  Reimbursing the state general fund for debt service on
 
 3           general obligation bonds or reimbursable general
 
 4           obligation bonds issued by the State for the purposes
 
 5           of the corporation;
 
 6     (17)  Pledging or assigning all or any part of the receipts
 
 7           and revenues of the corporation for purposes of meeting
 
 8           bond or health systems liabilities;
 
 9     (18)  Owning, purchasing, leasing, exchanging, or otherwise
 
10           acquiring property, whether real, personal or mixed,
 
11           tangible or intangible, and of any interest therein, in
 
12           the name of the corporation, which property is not
 
13           owned or controlled by the State but is owned or
 
14           controlled by the corporation;
 
15     (19)  Maintaining, improving, pledging, mortgaging, selling,
 
16           or otherwise holding or disposing of property, whether
 
17           real, personal or mixed, tangible or intangible, and of
 
18           any interest therein, at any time and manner, in
 
19           furtherance of the purposes and mission of the
 
20           corporation; provided that the a corporation legally
 
21           holds or controls the property in its own name; and
 
22           provided further that the corporation shall not sell,
 

 
a                                                     HTH-16(00)
 
Page 23                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1           assign, lease, hypothecate, mortgage, pledge, give, or
 
 2           dispose of [a substantial portion] all or substantially
 
 3           all of its property [of any nature];
 
 4     (20)  Purchasing insurance and creating captive insurers in
 
 5           any arrangement deemed in the best interest of the
 
 6           corporation, including but not limited to funding and
 
 7           payment of deductibles and purchase of reinsurance;
 
 8     (21)  Acquiring by condemnation, pursuant to chapter 101, any
 
 9           real property required by the corporation to carry out
 
10           the powers granted by this chapter;
 
11     (22)  Depositing any moneys of the corporation in any banking
 
12           institution within or without the State, and
 
13           appointing, for the purpose of making deposits, one or
 
14           more persons to act as custodians of the moneys of the
 
15           corporation;
 
16     (23)  Contracting for and accepting any gifts, grants, and
 
17           loans of funds, property, or any other aid in any form
 
18           from the federal government, the State, any state
 
19           agency, or any other source, or any combination
 
20           thereof, and complying, subject to this chapter, with
 
21           the terms and conditions thereof;
 
22     (24)  Providing health and medical services for the public
 

 
a                                                     HTH-16(00)
 
Page 24                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1           directly or by agreement or lease with any person,
 
 2           firm, or private or public corporation or association
 
 3           through or in the health facilities of the corporation
 
 4           or otherwise;
 
 5     (25)  Approving medical staff bylaws, rules, and medical
 
 6           staff appointments and reappointments for all public
 
 7           health facilities, including without limitation,
 
 8           determining the conditions under which a health
 
 9           professional may be extended the privilege of
 
10           practicing within a health facility, and adopting and
 
11           implementing reasonable rules, without regard to
 
12           chapter 91, for the credentialing and peer review of
 
13           all persons and health professionals within the
 
14           facility; 
 
15       (26)(A)  Investing any funds not required for immediate
 
16                Disbursement in property or in securities that
 
17                meet the standard for investments established in
 
18                chapter 88 as provided by the corporation board;
 
19                provided the investment assists the corporation in
 
20                carrying out its public purposes; selling from
 
21                time to time securities thus purchased and held,
 
22                and depositing any securities in any bank or
 

 
a                                                     HTH-16(00)
 
Page 25                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1                financial institution within or without the State.
 
 2                Any funds deposited in a banking institution or in
 
 3                any depository authorized in this section shall be
 
 4                secured in a manner and subject to terms and
 
 5                conditions as the corporation board may determine,
 
 6                with or without payment of any interest on the
 
 7                deposit, including, without limitation, time
 
 8                deposits evidenced by certificates of deposit. Any
 
 9                bank or financial institution incorporated under
 
10                the laws of this State may act as depository of
 
11                any funds of the corporation and may issue
 
12                indemnity bonds or may pledge securities as may be
 
13                required by the corporation board.
 
14           (B)  Notwithstanding subparagraph (A), contracting with
 
15                the holders of any of its notes or bonds as to the
 
16                custody, collection, securing, investment, and
 
17                payment of any moneys of the corporation and of
 
18                any moneys held in trust or otherwise for the
 
19                payment of notes or bonds and carrying out the
 
20                contract. Moneys held in trust or otherwise for
 
21                the payment of notes or bonds or in any way to
 
22                secure notes or bonds, and deposits of such
 

 
a                                                     HTH-16(00)
 
Page 26                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1                moneys, may be secured in the same manner as
 
 2                moneys of the corporation, and all banks and trust
 
 3                companies are authorized to give security for the
 
 4                deposits;
 
 5     (27)  Entering into any agreement with the State including
 
 6           but not limited to contracts for the provision of
 
 7           goods, services, and facilities in support of the
 
 8           corporation's programs, and contracting for the
 
 9           provision of services to or on behalf of the State;
 
10     (28)  Having a seal and altering the same at pleasure;
 
11     (29)  Waiving, by means that the corporation deems
 
12           appropriate, the exemption from federal income taxation
 
13           of interest on the corporation's bonds, notes, or other
 
14           obligations provided by the Internal Revenue Code of
 
15           1986, as amended, or any other federal statute
 
16           providing a similar exemption;
 
17     (30)  Developing internal policies and procedures for the
 
18           procurement of goods and services, consistent with the
 
19           goals of public accountability and public procurement
 
20           practices, but not subject to chapter 103D. However,
 
21           where possible, the corporation is encouraged to use
 
22           the provisions of chapter 103D; provided that the use
 

 
a                                                     HTH-16(00)
 
Page 27                                                    2532
                                     H.B. NO.           
                                                        
                                                        

 
 1           of one or more provisions of chapter 103D shall not
 
 2           constitute a waiver of the exemption from chapter 103D
 
 3           and shall not subject the corporation to any other
 
 4           provision of chapter 103D;
 
 5     (31)  Authorizing and establishing positions;
 
 6     (32)  Calling upon the attorney general for such legal
 
 7           services as the corporation may require; and
 
 8     (33)  Having and exercising all rights and powers necessary
 
 9           or incidental to or implied from the specific powers
 
10           granted in this chapter, which specific powers shall
 
11           not be considered as a limitation upon any power
 
12           necessary or appropriate to carry out the purposes and
 
13           intent of this chapter."
 
14      SECTION 7.  Statutory material to be repealed is bracketed.
 
15 New statutory material is underscored.
 
16      SECTION 8.  The provisions of this Act are declared to be
 
17 severable and if any portion thereof is held to be invalid for
 
18 any reason, the validity of the remainder of this Act shall not
 
19 be affected.
 
20      SECTION 9.  This Act shall take effect upon its approval.
 
21 
 
22                           INTRODUCED BY: ________________________
 

 
a                                                     HTH-16(00)