HB1039 HD1.DOC

SECTION 1. The legislature hereby finds and declares that:

(1) The United States Congress has authorized states under the federal National Highway System Designation Act of 1995 and the federal Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (Public Law 109-59) to issue grant anticipation revenue vehicles, or "GARVEE bonds," which are tax-exempt revenue anticipation notes or bonds backed by annual federal appropriations for federal-aid highway program transportation projects;

(2) Using revenue anticipation notes and bonds to finance federal transportation projects can greatly accelerate projects and can result in significant cost savings to the State, since those transportation projects can be completed at present-day costs;

(3) Funding transportation projects with revenue anticipation notes or bonds can also deliver projects to the public significantly sooner than traditional funding mechanisms; and

(4) Therefore, it is in the best interest of the State of Hawaii to develop these new and innovative methods for funding and accelerating critical transportation infrastructure projects.

SECTION 2. Chapter 264, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . FEDERAL HIGHWAY REVENUE ANTICIPATION NOTES AND BONDS

§264-A Definitions. As used in this part, unless a different meaning clearly appears from the context:

"Department" means the department of transportation.

"Director" means the director of transportation.

"Federal transportation funds" means any funds apportioned to the State by the United States Department of Transportation including but not limited to funds paid pursuant to the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (Public Law 109-59) and any successor federal-aid highway program authorization act or acts, and includes federal reimbursements and grants with respect to qualified federal-aid highway program transportation projects.

"Qualified federal-aid highway program transportation project" means any project that may be financed, in whole or in part, with federal transportation funds.

"Revenue anticipation notes" or "notes" means revenue anticipation notes or bonds authorized and issued by the department in accordance with this part.

"State matching funds" means revenues other than federal transportation funds that are credited to the state highway fund in accordance with section and that may be used by the department to pay the costs of any qualified federal-aid highway program transportation projects.

§264-B Transportation financing account. There is hereby created as a special trust fund in the state highway fund the transportation financing account, which shall be administered by the department. The proceeds of the sale of revenue anticipation notes shall be deposited into the transportation financing account. The moneys in the transportation financing account shall be available, subject to appropriation by the legislature, for use with respect to qualified federal-aid highway program transportation projects:

(1) To pay the principal of and interest on notes;

(2) To fund reserve funds;

(3) To pay costs associated with the issuance or further security of the notes; or

(4) For capitalized interest of up to thirty-six months.

§264-C Selection of qualified federal-aid highway program transportation projects. (a) The director may from time to time select and designate qualified federal-aid highway program transportation projects to be funded from the proceeds of notes; provided that financing of the project from the proceeds of notes has been approved by the federal highway administration and the regional transportation planning agency, and the project has completed environmental clearance and project design. The director shall submit the list of the projects, together with the anticipated cost thereof, to the legislature as part of the department's annual budget, together with the request that the legislature authorize the issuance of notes and appropriate the proceeds thereof to the projects in accordance with part III of chapter 39.

(b) On or before April 1 of each year, the department, in conjunction with the department of budget and finance, shall prepare an annual analysis of the bonding capacity of federal transportation funds deposited in the state highway fund.

(c) The department shall establish guidelines for eligibility for funding allocations under this part. The guidelines shall be nondiscriminatory and shall be designed to allow as many counties as possible to establish eligibility for funding allocations under this part, regardless of the population size or geographic location of the county.

§264-D Issuance of revenue anticipation notes. (a) The department, to provide for the financing of selected qualified federal-aid highway program transportation projects, may issue revenue anticipation notes. The payment of the principal of; premium, if any; and interest on the revenue anticipation notes shall be secured by a pledge of future receipts of federal transportation funds, in accordance with part III of chapter 39. Revenue anticipation notes are hereby determined to be revenue bonds, and receipts of federal transportation funds are hereby determined to be revenues within the meaning of part III of chapter 39. The department:

(1) Shall comply with Title 23 United States Code Section 122, when issuing revenue anticipation notes under this part;

(2) May issue tax-exempt or taxable revenue anticipation notes, within the department's allowable debt-to-projected-revenue ratio and within the State's debt limit, as approved by the director of finance; provided that the director of finance may not authorize the issuance of revenue anticipation notes if the annual repayment obligations of all outstanding revenue anticipation notes in any fiscal year, determined as of the date of issuance of each series of notes, would exceed fifty per cent of the total amount of federal highway funds apportioned to the State by the United States Department of Transportation during the fiscal year next preceding the fiscal year in which the series of notes is issued;

(3) Shall ensure that all qualified federal-aid highway program transportation projects to be funded by revenue anticipation notes are subject to legislative appropriation;

(4) Shall study the costs and risks associated with the proposed use of revenue anticipation notes before issuance, in comparison to other funding mechanisms including but not limited to pay-as-you-go, federal advance construction, federal incremental advance construction, or other funding mechanisms authorized under federal law to achieve maximum efficiency from the State's federal allocation of transportation funds;

(5) May use alternative funding sources for revenue stream or insurance to back up a potential shortfall in federal authorization or obligation; and

(6) Shall deposit the proceeds of the sale of revenue anticipation notes issued under this part and apply such proceeds as provided by section 264-B.

(b) The department may use proceeds of revenue anticipation notes to accelerate construction of qualified federal-aid highway program transportation projects by:

(1) Using the federal moneys to pay the debt service for revenue anticipation notes; and

(2) Using the federal moneys received in connection with other federal-aid projects to pay debt service on the revenue anticipation notes; provided that, as permitted by Title 23, United States Code, the debt-financed transportation projects for which federal reimbursements are used need not themselves be federal-aid projects.

§264-E Annual reports. On or before December 1 of each year, the director shall prepare and submit an annual report regarding the preceding fiscal year to the governor and the legislature. Each report shall compile and detail:

(1) The total amount of outstanding revenue anticipation notes issued pursuant to this part;

(2) The qualified federal-aid highway program transportation projects funded by those outstanding revenue anticipation notes;

(3) The amount of note proceeds expended on each project;

(4) The status of each project;

(5) The estimated date of completion for the projects not yet completed;

(6) The total amount of federal transportation funds paid to the department since the revenue anticipation notes have been issued; and

(7) The total amount of proceeds from the issuance of revenue anticipation notes, state matching funds, and federal transportation funds applied by the department in each fiscal year for the payment of the revenue anticipation notes and the costs associated with the issuance and administration of the notes."

SECTION 3. Section 39-51, Hawaii Revised Statutes, is amended by amending the definitions of "revenue" and "revenue bonds" to read as follows:

""Revenue" means the moneys collected, including any moneys collected from the State or any department, or any county or board, agency or instrumentality thereof, from the rates, rentals, fees, and charges prescribed for the use and services of, and the facilities and commodities furnished by, an undertaking or the use and services and benefits of a loan program; provided that the term shall include all insurance premium payments, assessments, surcharges, investment earnings, and all other income of the Hawaii hurricane relief fund[.], and all reimbursements and grants received from the United States Department of Transportation with respect to federal-aid highway program transportation projects.

"Revenue bonds" means all bonds payable solely from and secured by the revenue, or user taxes, or any combination of both, of an undertaking or loan program or any loan made thereunder for which bonds are issued and as otherwise provided in this part; provided that the term shall include:[~~all~~]

(1) All bonds issued by the director of finance under the authority of section 10(a), Act 339, Session Laws of Hawaii 1993, as amended, for the purposes of the hurricane bond loan fund[.]; and

(2) All revenue anticipation notes or bonds issued by the director of transportation under the authority of section , Act , Session Laws of Hawaii 2011, as amended, for the purposes of the transportation financing account of the highway special fund."

SECTION 4. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in 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, 2030, and upon ratification of a constitutional amendment to article VII, section 12, of the Hawaii State Constitution, authorizing the State to issue federal-aid highway transportation program revenue anticipation bonds, payable from and secured in whole or in part by rates, rentals, and charges consisting of payments, reimbursements, and grants from the United States government, and use the proceeds from the bonds to finance federal-aid highway program transportation projects.

HOUSE OF REPRESENTATIVES	H.B. NO.	1039
TWENTY-SIXTH LEGISLATURE, 2011		H.D. 1
STATE OF HAWAII