Requires the board of land and natural resources to develop a request for proposals for competitive sealed proposals to lease, improve, operate, maintain, and manage Honokohau harbor on the island of Hawaii as a private small boat harbor.

A BILL FOR AN ACT

SECTION 1. The legislature finds that there is a need to provide for the privatization of small boat harbors in Hawaii. The State's small boat harbors are important assets that are constructed, maintained, and operated for the purposes of recreational boating activities, landing of fish, commercial vessel activities, and interisland commerce. These harbors are centers of economic activity, and as such, must be managed and operated in a manner to facilitate recreation, commerce, and interisland transportation.

The legislature further finds, however, that small boat harbors, which are regulated by the board of land and natural resources, are currently subjected to a multitude of rules, some of which are excessive and costly. The legislature finds that privatizing small boat harbors could streamline services, cut costs, and increase revenues.

The legislature enacted Act 160, Session Laws of Hawaii 1997, among other things, to create a task force within the department of land and natural resources to evaluate the feasibility of, and make recommendations regarding, the establishment of a community-based management pilot program for one or more more small boat harbors.

The intent of this Act, however, is somewhat different. Act 160 demonstrated that community-based management is effective, but only up to a certain point. The legislature finds that contracting out the management and operation of a small boat harbor is a more effective way to achieve the ends desired. The intent of privatization is to make the harbor virtually self-supporting without raising user fees substantially for existing permittees.

Allowing a private entity to construct and maintain non-marina related commercial structures, such as condominiums and retail establishments, will enable that entity to stay profitable without the need to raise fees for boat harbor users. The legislature finds that the Honokohau harbor on the Big Island represents an excellent candidate for privatization under this pilot project because of its manageable size, excellent location, and potential for further development. The legislature envisions developing the area along the lines of the Marina del Rey area of Los Angeles.

Accordingly, the purpose of this Act is to:

The legislature finds that the privatization of Honokohau harbor will enhance the successful management and operations of that harbor and assist in streamlining the delivery of government services.

SECTION 2. Definitions. As used in this Act, unless the context otherwise requires:

"Board" means the board of land and natural resources.

"Contractor", "private contractor", or "private entity" means a person who has entered into a contract with the State pursuant to this Act.

"Department" means the department of land and natural resources.

"Small boat harbor" or "harbor" means the Honokohau harbor on the island of Hawaii.

SECTION 3. Authority to contract. (a) The board shall contract with a private entity for the lease, improvement, operation, maintenance, and management of the Honokohau harbor on the island of Hawaii as provided in this Act.

(b) No contract shall be entered into or renewed unless the board determines that the contract offers at least the same quality of services provided by the State. The contract shall be approved as to form and content by the attorney general.

SECTION 4. Request for proposals; prequalification of applicants. (a) The board shall develop a request for proposals for competitive sealed proposals to lease, improve, operate, maintain, and manage a privately run small boat harbor in accordance with this Act.

(b) The request for proposals shall be calculated to generate proposals from applicants on a list who have been prequalified by board and shall be applicable to any contract between the State and any private entity entered into under the authority of this Act. Standards for prequalification of applicants under this section shall be determined by the board before the commencement of the selection process; provided that any contract entered into under this Act for the operation of the harbor, at a minimum, shall be negotiated with the private entity found to be the most qualified. The private entity shall demonstrate that it has the qualifications, experience, and personnel necessary to carry out the terms of the contract, and the ability to comply with applicable laws.

(c) Any contract entered into pursuant to this Act shall include the following specific provisions:

SECTION 5. Contract term and renewal; transfer of lease. The initial contract for the lease, improvement, operation, maintenance, and management of Honokohau harbor as a private small boat harbor shall be for a period of not less than fifty years, and may be renewed for successive       year periods thereafter; provided that the lease may be transferred to another private entity with the prior written approval of the board.

SECTION 6. Monitoring; right to access. (a) The State, at the contractor's expense, shall employ an individual to be responsible for monitoring all aspects of the private contractor's performance under a contract entered into pursuant to this Act. The individual employed as contract monitor shall be qualified to perform this function by reason of education, training, and experience as determined by the board. The monitor, with the approval of the contracting governmental entity, shall appoint staff as necessary to assist in monitoring, which staff shall be at the contractor's expense and shall be solely responsible to the contract monitor. The monitor or the monitor's designee shall be provided an on-site work area by the contractor, shall be on-site on a daily basis, and shall have access to all areas of the harbor at all times. The contractor shall provide any and all data, reports, and other materials that the monitor determines are necessary to carry out monitoring responsibilities under this section.

(b) The monitor shall be responsible to and report to the board at least monthly, and more often as necessary to ensure proper operation of the harbor, concerning the contractor's performance.

(c) Members of the public shall have the same right of access to harbor facilities operated by a private contractor pursuant to this Act as they do to state-operated facilities.

SECTION 7. Liability and sovereign immunity. (a) The contractor shall assume all liability arising under a contract entered into pursuant to this Act.

(b) The sovereign immunity of the State shall not extend to the contractor. Neither the contractor nor the insurer of the contractor may plead the defense of sovereign immunity in any action arising out of the performance of the contract, or as a defense in tort, or any other application, with respect to the performance of the contract.

SECTION 8. Insurance. (a) The contractor shall indemnify the State, including its officials and agents, against any and all liability. Proof of satisfactory insurance shall be required in an amount to be determined by the insurance commissioner. The attorney general shall determine the amount and manner of the indemnification.

(b) Subject to subsection (a), the contractor shall provide an adequate plan of insurance as determined by the insurance commissioner. In determining the adequacy of the plan, the contractor shall determine whether the insurance is adequate to:

SECTION 9. Termination of contract and resumption of control. (a) The State, upon demonstration that a breach of contract has occurred and that after the passage of a reasonable period of time the breach has not been cured, and without penalty to the State, may cancel a contract at any time upon giving a six-month written notice. A plan shall be developed by the contractor and approved by the State establishing the method by which the State will resume control of the harbor upon contract termination.

(b) Any contract entered into under this Act shall provide that upon declaration by the State of any material breach of contract on the part of the private contractor, the State, if necessary, may assume immediate temporary control of the harbor.

SECTION 10. Rulemaking authority. The board shall adopt rules pursuant to chapter 91, Hawaii Revised Statutes, as may be necessary to carry out this Act.

SECTION 11. Applicability of Act to other provisions of law. Any offense that if committed at a small boat harbor operated by the State would be a crime shall be a crime if committed at a harbor operated by a private entity pursuant to a contract entered into under this Act.

SECTION 12. Evaluation of costs and benefits of contracts. The auditor shall evaluate the costs and benefits of any contract entered into under this Act. The evaluation shall include a comparison of the costs and benefits of operating, maintaining, and managing a small boat harbor by the State versus by a private contractor. The auditor shall also evaluate the performance of the private contractor at the end of the term of each contract and make recommendations to the speaker of the house of representatives and the president of the senate regarding whether to continue the contract.

SECTION 13. Prohibition. A bidder or potential bidder shall not have any contract with any member or employee of or consultant to any governmental entity responsible for awarding any contract under this Act from the time a request for proposals is issued until the time a contract is awarded, except if that contract is in writing or in a meeting for which notice was given as prescribed by law.

SECTION 14. Severability. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 15. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 16. This Act shall take effect upon its approval.