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HOUSE OF REPRESENTATIVES |
H.B. NO. |
2740 |
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TWENTY-FIFTH LEGISLATURE, 2010 |
H.D. 1 |
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STATE OF HAWAII |
S.D. 1 |
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A BILL FOR AN ACT
RELATING TO SCHOOLS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that the certificate of participation is a method of financing capital improvement projects in which an investor buys a share of the lease revenues of an agreement made between the government and the developer, rather than the bond being issued by the government and secured by those lease revenues. Specifically, under this method of financing, the department of budget and finance enters into a lease agreement with a developer to "front the financing," thereby enabling a capital improvement project to be designed and built prior to the expending state agency's obtaining the necessary capital improvement project appropriation from the legislature. Certificates of participation have been used to finance the building of the state office building at Kapolei and to finance the purchase of the capitol district office building (Hemmeter Building).
The primary advantages of certificate of participation financing are speed and lower costs. Projects will be completed in a shorter period of time than under the traditional method of financing a project through bond appropriation and the ensuing allotment process over an incremental period of years. Moreover, lower costs will ensue because the design and construction phases of a project can actually be packaged together, rather than separated by fiscal years. The primary disadvantage is the complexity of the process, since it requires coordination between the department of budget and finance, the department of accounting and general services, the department of the attorney general, the governor, and the legislature. However, given the current dire state of Hawaii's economy, the advantage of lower costs easily prevails over the disadvantage of mere administrative complexity.
The purpose of this Act is to:
(1) Clarify that the department of education is authorized to enter into financing agreements or issue certificates of participation for the acquisition of public school facilities and any lands for these facilities;
(2) Direct the department of education to consider, as the preferred method of financing the planning, design, and construction of the Royal Kunia elementary school II, entering into a financing agreement with or issuing certificates of participation to a private developer; and
(3) Appropriate state educational facilities improvement special funds for the purposes of this Act.
SECTION 2. Section 302A-1506, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1506 Public school
facilities. The department may enter into [such] contracts, leases,
lease-purchase agreements, financing agreements or certificates of
participation, pursuant to chapter 37D and section 36‑32, or other
transactions as may be necessary for the acquisition of public school
facilities, including any lands for these facilities, on such terms as it may
deem appropriate with the concurrence of the director of finance."
SECTION 3. The department of education shall consider as the preferred method of financing the planning, design, and construction of Royal Kunia elementary school II at Kunia, Oahu, Hawaii, entering into a financing agreement with or issuing certificates of participation to a private developer, pursuant to chapter 37D and section 36‑32, Hawaii Revised Statutes.
SECTION 4. There is appropriated out of the state educational facilities improvement special fund of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2010-2011 for the planning, design, and construction of Royal Kunia elementary school II at Kunia, Oahu, Hawaii; provided that the remaining costs necessary to complete the project shall also be eligible for funding through a financing agreement or issuance of certificates of participation.
The sum appropriated shall be expended by the superintendent of education for the purposes of this Act.
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect on July 1, 2050.
Report Title:
Public School Facilities; Royal Kunia Elementary; Certificate of Participation; Appropriation
Description:
Clarifies that the DOE is authorized to enter into financing agreements or issue certificates of participation for the acquisition of public school facilities and lands for these facilities. Directs the DOE to consider entering into a financing agreement or issuance of certificates of participation for the planning, design, and construction of Royal Kunia elementary school II and appropriates funds for the necessary payments. Effective July 1, 2050. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.