WHEREAS, education is universally recognized as the key to Hawaii's future in a global economy; and

WHEREAS, however, except for the State's most modern campuses, the conditions of many of Hawaii's schools are hampering the educational opportunities of Hawaii's children; and

WHEREAS, as a poor learning environment frequently begets a poor education, Hawaii's rundown, unhealthy, and even dangerous school facilities will not support the kind of teaching our children deserve; and

WHEREAS, appropriations that are handled in the typical bureaucratic manner generally provide for funds to be disbursed throughout the whole of the system, which leaves no single school prepared to provide the physical environment in which effective learning can occur; and

WHEREAS, one way to address the deterioration and degradation of school facilities is to develop public-private partnerships for the construction of new schools throughout the State; and

WHEREAS, public-private partnerships have already been used successfully by the federal government, for example, for the construction of new facilities at Ford Island, Hawaii; and

WHEREAS, the Ford Island development project is a multi-million dollar public-private development made possible through special federal legislation adopted by Congress in 1999, under which the Navy is executing a phased development program to improve the quality of life for sailors and their families as well as meeting facility requirements; and

WHEREAS, the State has also recently used a public-private partnership to finance the construction of the Kakuhihewa building in Kapolei, Oahu, using "certificates of participation"; and

WHEREAS, one type of public-private partnership that could be used to construct new school facilities is a lease-purchase agreement, in which a private developer either renovates an existing school or demolishes and rebuilds a school, and then leases the facility back to the State for a period of years, with an option to purchase the school at the end of that period; and

WHEREAS, a lease-purchase agreement was previously authorized by the Legislature by House Concurrent Resolution No. 156, H.D. 1 (1994), as a pilot project to request the Department of Education to enter into such a transaction for the construction of a new elementary school in Kihei, Maui; and

WHEREAS, according to that concurrent resolution, in response to Kihei, Maui being one of the fastest growing areas in the State, the Department of Education identified a site in Kihei for a new elementary school, and the Board of Land and Natural Resources approved the site and authorized its acquisition; and

WHEREAS, the site's landowner expressed a willingness to design and construct the elementary school to the Department of Education's specifications and lease the completed facilities to the Department for ten to thirty years with an option to purchase it for $1; and

WHEREAS, lease payments were to be set at an amount that would allow the landowner to recover its own payments on the mortgage used to finance the costs of title clearance and facilities design, development, and construction; and

WHEREAS, the House Concurrent Resolution further noted that "the lease-and-purchase is a pilot project that will test the efficiency and expeditiousness of an alternative mechanism through which the State constructs and delivers much-needed classrooms and school facilities with the assistance of the private sector"; and

WHEREAS, the completed school at Kihei, named "Kamalii", was eventually constructed as a real estate transaction, rather than as a lease-purchase agreement, in which the State simply purchased the new facility. The State made progress payments to the private developer while the school was being constructed, and paid the final amount upon completion. Moneys were allocated from special fund capital improvement project appropriations earmarked for educational facilities; and

WHEREAS, another school in Kahului, Maui, named "Mauilani", is also being proposed to be constructed through a public-private partnership. Now in the design phase, the landowner-developer will be constructing the school and will sell the school back to the State upon its completion, using the Kihei school as a model; and

WHEREAS, the advantages of using this approach are that it is less expensive and faster than constructing schools the more traditional way. Schools being constructed by the Department of Education and the Department of Accounting and General Services must be accomplished in two phases, since appropriations are generally made over two fiscal years. Following the first phase, coinciding with the first fiscal year appropriation, the project must be bid out again for the second phase in the second fiscal year, and may be awarded to a different contractor. This tends to increase the time and cost needed to complete the project. On the other hand, a private contractor can usually obtain a loan for the entire school project, and can complete the facility in one phase instead of two; and

WHEREAS, pursuant to section 302A-1506, Hawaii Revised Statutes, the Department of Education already has the power to enter into "contracts, leases, lease-purchase agreements, or other transactions" with the private sector as may be necessary to acquire public school facilities and lands, subject to the approval of the Comptroller; and

WHEREAS, there is a need for further partnerships with the private sector to benefit Hawaii's school children, given the success of the federal government's development of Ford Island, the Kihei elementary school public-private partnership, and other cooperative activities with the private sector, together with the continuing need for new, modern school facilities built in a timely, efficient manner; and

WHEREAS, allowing the private sector to build a new school facility will generally allow for construction in a shorter time period and more efficiently than could be provided by the State, and would free up needed funds to address deterioration at other schools; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-second Legislature of the State of Hawaii, Regular Session of 2003, that the Department of Education is requested to implement a pilot project for the construction of new school facilities through public-private partnerships; and

BE IT FURTHER RESOLVED that the pilot project is requested to include the following elements:

and

BE IT FURTHER RESOLVED that the Department of Education is requested to report preliminary findings and progress in implementing the pilot project to the Legislature no later than twenty days before the convening of the Regular Session of 2003; and

BE IT FURTHER RESOLVED that the Department of Education is requested to submit a final report of findings and recommendations to the Legislature no later than twenty days before the convening of the Regular Session of 2004; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Superintendent of Education, the Chairperson of the Board of Education, and the State Comptroller.