Provides seed money to establish the charter school facilities fund partnership. Allows the State to enter into leases with charter schools at rates comparable to other state agencies. Effective date July 1, 2020. (SB3054 HD2)

A BILL FOR AN ACT

PART I

SECTION 1. The legislature finds that, given the State's limited resources, the lack of facilities funding is one of the biggest challenges facing Hawaii's charter schools. To help minimize the financial burden on the State to support facilities, scarce public resources may be leveraged through a public-private partnership similar to the Hawaii 3R's program. Like the Hawaii 3R's program, the partnership would:

While the Hawaii 3R's program focuses on repair and maintenance, the charter school facilities fund partnership would focus on providing below-market loans to charter schools for buildings and capital improvements of their facilities. The purpose of the partnership or financing "hui" would be to create and administer a revolving loan fund.

The Los Angeles charter school new market loan fund could serve as the model for Hawaii's initiative. The fund makes loans possible with funding from the private sector. As an added incentive, businesses, communities, and financial lenders are able to take advantage of federal community development and tax credits under the federal Community Reinvestment Act and the federal new markets tax credit program. The fund has also partnered with Excellent Education Through Charter Schools, a nonprofit research and development corporation, to underwrite and service each loan.

The Los Angeles fund initially focused on fostering investment in low-income areas, defined in federal census tracts as areas with eighty per cent or less of the California's median income. If Hawaii were to use the same criteria, eleven of Hawaii's twenty-seven existing charter schools could qualify for loans under this model. In addition to the low-income requirement, Hawaii could also permit schools with a concentration of native Hawaiians to be considered applicants in a pilot program of this nature.

Potential partners from the public and nonprofit sectors could include the office of the governor, the department of business, economic development, and tourism, the department of land and natural resources, the department of Hawaiian home lands, the office of Hawaiian affairs, the task force on charter school governance, and Kamehameha Schools. Private partners could include the Bank of Hawaii and American Savings Bank, which have already expressed a preliminary, tentative interest in technical financial assistance to charter schools through the Kamehameha Schools' Hoolako Like program. Potential organizations that could serve as incubators include the Hawaii Charter School Network or the Hawaii Community Loan Fund.

For the purpose of ensuring the long-term viability of the charter school facilities fund partnership, the State may also, in the long run, provide ongoing support by:

The purpose of this part is to provide seed money to help establish the charter school facilities fund partnership, whose initial planning, organization, and development shall be undertaken by the charter school administrative office.

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2006-2007 as seed funds for the charter school administrative office to plan, organize, and develop the charter school facilities fund partnership.

The sum appropriated shall be expended by the charter school administrative office for the purposes of this part.

SECTION 3. The charter school administrative office shall prepare and submit a progress report on its activities pursuant to section 2, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2007.

PART II

SECTION 4. Public charter schools have great difficulty with leasing affordable land on which to locate schools due to prohibitive costs and zoning restrictions. As public schools and state agencies, charter schools should have access to state-held lands and buildings and enjoy comparable rates and conditions as those afforded other state agencies.

The purpose of this part is to encourage the State to enter into long-term leases of lands and buildings with charter schools for the location of school facilities.

SECTION 5. Chapter 171, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§171-   Lease to public charter schools. Notwithstanding any limitations to the contrary, the board may lease to new century charter schools, at nominal consideration, by direct negotiation and without recourse to public auction, public lands and buildings under the control of the department. Except as provided in this section, the terms and conditions of sections 171-33 and 171-36 shall apply. The lands and buildings leased under this section shall be used by the new century charter schools for educational purposes only. This section shall not apply to new century conversion charter schools."

SECTION 6. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2020; provided that section 2 shall take effect on July 1, 2006.