Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2006

State of Hawaii

Sir:

Your Committee on Transportation and Government Operations, to which was referred S.B. No. 2662 entitled:

begs leave to report as follows:

The purpose of this measure is to provide temporary relief from lease and permit requirements for airport vendors who want to make improvements.

Your Committee received testimony in support of this measure from the Department of Transportation, HMSHost, and the Legislative Committee for the Airports Concessionaires Committee. Testimony in opposition was received from Hawaii Pacific Wings.

Many airport concessions are in need of improvements, but a number of airport concessions have complained that, given stringent accounting rules, they cannot make necessary improvements to their concessions due to the very short, or no, remaining term on their concession leases that prevent them from amortizing further improvements. Over twenty airport concessions now experience this problem. As a result, improvements that the airports and various concessionaires would like to see are simply not happening. Hawaii's airports would have a better overall appearance and potentially enhanced revenues to the department of transportation if improvements could be made.

Your Committee finds that while the economy has now improved, it will take two to three years to put these twenty or more concessions out to bid. Rather than have some of these concessions forego necessary improvements for two to three more years, it would be beneficial to both concessionaires and the airports if some of the concession leases could be extended on a short-term basis to allow for some improvements. These improvements would improve the overall appearance of the airports and make the concessions more attractive to customers.

As affirmed by the record of votes of the members of your Committee on Transportation and Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2662 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.