Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 1199, S.D. 1, entitled:

begs leave to report as follows:

The purposes of this measure as referred to your Committee were to amend the legal definition of "concession" to include services such as communications and telecommunications, and to authorize issuance of revocable permits for concessions for up to one year.

Prior to the hearing on this measure your Committee prepared and circulated a proposed S.D. 1 that further amended the definition of "concession " to include advertising services that would be subject to competitive sealed bids as a concession or concession space. Your Committee's proposed S.D. 1 also provides statutory authorization for the State to enter into concessions contracts for parking lot operations by means of competitive sealed proposals.

The proposed S.D. 1 version of this measure was discussed at the public hearing. Your Committee received testimony in support of the amended measure from the Department of Transportation.

Your Committee supports these proposed amendments to the concessions law, which will primarily affect businesses operating at the State's airports. Your Committee finds that existing law (section 102-1, Hawaii Revised Statutes) defines "concession" as any operation that is "essentially retail in nature."

This broad definition has created ambiguities in the treatment of services such as communications and telecommunications, which will be resolved by this amendment. Your Committee supports inclusion of advertising services in the definition of "concession," for the same reasons.

Your Committee also supports the amendments in the original measure to provide statutory authorization for the issuance of revocable permits for up to one year, for any reason. The Department of Transportation testified that it often needs the flexibility to issue permits for concessions for up to one year, without going through the lengthy bidding process.

Your Committee's proposed S.D. 1 also provides authorization for the State to award concessions for parking operations under a competitive sealed proposal process if the competitive sealed bidding process is impracticable or would be less advantageous to the State. The competitive sealed proposal process allows an awarding government agency to give weight to factors other than overall financial return. In any field where the intangible attributes of a business operation are as important as financial return, the State should have the opportunity to look at those factors.

Although your Committee supports these amendments in principle, there is some opposition to this measure. Therefore, your Committee has further amended this measure to delay its effective date until January 1, 2050, to allow further discussion of these issues.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1199, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1199, S.D. 2.