Report Title:

Hawaii Medical Center, Special Purpose Revenue Bonds

Description:

Amends part II of chapter 39A, HRS, to allow the issuance of special purpose revenue bonds to all corporations that provide health care facilities to the general public.  Authorizes the issuance of special purpose revenue bonds to assist Hawaii Medical Center.

HOUSE OF REPRESENTATIVES	H.B. NO.	1813
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII

A BILL FOR AN ACT

relating to the issuance of special purpose revenue bonds to assist hawaii medical center.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

PART I.

     SECTION 1.  Part II of chapter 39A, Hawaii Revised Statutes, is amended by amending its title to read as follows:

"PART II.  ASSISTING [NOT-FOR-PROFIT] CORPORATIONS

THAT PROVIDE HEALTH CARE FACILITIES TO THE GENERAL PUBLIC"

     SECTION 2.  Section 39A-31, Hawaii Revised Statutes, is amended by amending the definitions of "project agreement" and "project party" to read as follows:

     ""Project agreement" means any agreement entered into under this part by the department with a project party providing for the issuance of special purpose revenue bonds to finance facilities of a project party or for a project party or to loan the proceeds of the bonds to assist [not-for-profit] corporations that provide health care facilities to the general public, including without limitation any loan agreement, lease, sublease, conditional sale agreement, or other similar financing contract or agreement, or any combination thereof, entered into by the department with a project party and, where necessary or appropriate, with a lender, lessor, or other third party.

     "Project party" means a [not-for-profit] corporation that provides health care facilities to the general public."

     SECTION 3.  Section 39A-36, Hawaii Revised Statutes, is amended to read as follows:

     "§39A‑36  Issuance of special purpose revenue bonds to finance projects.  In addition to the other powers [which] that it may otherwise have, the department may issue special purpose revenue bonds to finance or refinance, the costs of facilities of, or for, or to loan the proceeds of [such] the bonds to assist project parties.  All revenue bonds issued under this part are special purpose revenue bonds and [the provisions of] part III of chapter 39 shall not apply [thereto].  All special purpose revenue bonds shall be issued in the name of the department and not in the name of the State.

     The department, in determining the cost of any project, may also include the following:

(1)  [financing] Financing charges, fees, and expenses of any trustee and paying agents for special purpose revenue bonds issued to pay the cost of [such] the project;

(2)  [interest] Interest on [such] the bonds and the expenses of the State in connection with [such] the bonds and the project to be financed or refinanced from the proceeds of [such] the bonds accruing or incurred prior to and during the period of construction and for not exceeding twelve months thereafter;

(3)  [amounts] Amounts necessary to establish or increase reserves for the special purpose revenue bonds;

(4)  [the] The cost of plans, specifications, studies, surveys, and estimates of costs and of revenues;

(5)  [other] Other expenses incidental to determining the feasibility or practicability of the project;

(6)  [administration] Administration expenses;

(7)  [interest] Interest cost incurred by the project party with respect to the project prior to the issuance of the special purpose revenue bonds;

(8)  [fees] Fees and expenses incurred in connection with the refinancing of outstanding obligations; and [such]

(9) Any other costs, commissions, and expenses incidental to the construction, acquisition, reconstruction, renovation, rehabilitation, improvement, betterment, operation, or extension of the project, the financing or refinancing thereof, placing of same in operation, and the issuance of the special purpose revenue bonds, whether incurred prior to or after the issuance of [such] the bonds.

     The legislature finds and determines that the exercise of the powers vested in the department by this part constitutes assistance to [not-for-profit] corporations serving the general public and that the issuance of special purpose revenue bonds to finance or to refinance facilities of, or for, or to loan the proceeds of [such] the bonds to assist, project parties, is in the public interest."

     SECTION 4.  Section 39A-37, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Special purpose revenue bonds for each single project or multiproject program for health care facilities provided to the general public by [not-for-profit] corporations shall be authorized by a separate act of the legislature, by an affirmative vote of two-thirds of the members to which each house is entitled; provided that the legislature shall find that the issuance of [such] the bonds is in the public interest; provided further that no authorization shall be made for a period exceeding five years of its enactment.  Any such special purpose revenue bond authorization, or any portion of [such] any special purpose revenue bond authorization, which has not been issued at the close of the fiscal year for the period for which the authorization is made, shall lapse.  Special purpose revenue bonds issued pursuant to this part may be in one or more series for each project.  The special purpose revenue bonds of each issue shall be dated, shall bear interest at such rate or rates, shall mature at [such] the time or times not exceeding forty years from their date or dates, shall have [such] the rank or priority and may be made redeemable before maturity at the option of the department, at [such] any price or prices and under [such] any terms and conditions, [all as] that may be determined by the department.  The department shall determine the form of the special purpose revenue bonds, including any interest coupons to be attached thereto, and the manner of execution of the special purpose revenue bonds, and shall fix the denomination or denominations of the special purpose revenue bonds and the place or places of payment of principal and interest, which may be at any bank or trust company within or without the State.  The special purpose revenue bonds may be issued in coupon or in registered form, or both, as the department may determine, and provisions may be made for the registration of any coupon bonds as to principal alone and also as to both principal and interest, and for the reconversion into coupon bonds of any bonds registered as to both principal and interest.  The department may sell special purpose revenue bonds in [such] a manner, either at public or private sale, and for [such] a price [as] that it may determine."

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

PART II.

     SECTION 6.  The legislature finds and declares that the issuance of special purpose revenue bonds under this Act is in the public interest and for the public health, safety, and general welfare.

     SECTION 7.  Pursuant to part II, chapter 39A, Hawaii Revised Statutes, the department of budget and finance, with the approval of the governor, is authorized to issue special purpose revenue bonds in a total amount not to exceed $40,000,000, in one or more series, for the purpose of assisting Hawaii Medical Center, a Hawaii corporation, and one or more of its nonprofit affiliates, to finance and refinance equipment purchases, and for the construction and improvement of health care facilities, including the following:

     (1)  Remodeling and rebuilding existing health care facilities;

     (2)  Constructing new health care facilities;

     (3)  Purchasing new equipment;

     (4)  Refinancing debt; and

     (5)  Other related projects for Hawaii Medical Center and its affiliated nonprofit affiliations.

     The legislature hereby finds and determines that the activities and facilities of Hawaii Medical Center and its not-for-profit affiliates constitute a project as defined in part II, chapter 39A, Hawaii Revised Statutes, and the financing thereof is assistance to a corporation that provides health care facilities to the general public.

     SECTION 8.  The special purpose revenue bonds and the refunding special purpose revenue bonds issued under this Act shall be issued pursuant to part II, chapter 39A, Hawaii Revised Statutes, relating to the power to issue special purpose revenue bonds to assist corporations that provide health care facilities to the general public.

     SECTION 9.  The department of budget and finance is authorized, from time to time, including times subsequent to June 30, 2014, to issue special purpose revenue bonds in whatever principal amounts the department shall determine to be necessary to refund the special purpose revenue bonds authorized in section 7 and to refund special purpose revenue bonds authorized in this section, regardless of whether the outstanding special purpose revenue bonds or refunding special purpose revenue bonds have matured or are the subject of redemption or whether the refunding special purpose revenue bonds shall be bonds for the multi-project programs described in section 7.  In making this determination, the department shall comply with federal law relating to the exemption from federal income taxation of the interest on bonds of the nature authorized by this section.

     SECTION 10.  The authorization to issue special purpose revenue bonds under this Act shall lapse on June 30, 2014.

     SECTION 11.  This Act shall take effect upon its approval and upon ratification of a constitutional amendment allowing the issuance of special purpose revenue bonds for the purpose of assisting any corporation, rather than just a not-for-profit corporation, that provides health care facilities to the general public.

INTRODUCED BY:

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