STAND. COM. REP. NO. 2119

Honolulu, Hawaii

RE:    S.B. No. 2874

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

Sir:

     Your Committee on Transportation and International Affairs, to which was referred S.B. No. 2874 entitled:

"A BILL FOR AN ACT RELATING TO AIRPORT REVENUE,"

begs leave to report as follows:

     The purpose and intent of this measure is to provide the Department of Transportation with more options to generate revenue from non-aeronautical users of airport property.

     Your Committee received testimony in support of this measure from the Department of Transportation.  Comments were received from the Office of Hawaiian Affairs and the Airlines Committee of Hawaii.

     Your Committee finds that the Department of Transportation relies on revenue from airline operations, facility and space rental from aeronautical and airport-related users, revenues from concessions, and, to a very small extent, facility and space rentals from non-aeronautical or non-airport-related users.  The smallest of the revenue generators is by far non-aeronautical rentals.  However, the non-aeronautical revenue segment could be increased, without changing the nature of airports, by allowing additional flexibility in contracting with such users.  Increasing the opportunities for revenue generation at airports from non-aeronautical users is essential to the maintenance of a healthy and self-supporting airport system.

     Your Committee has amended this measure by:

     (1)  Deleting language in existing law that requires leases to contain a clause allowing repossession of the property by the Department of Transportation when needed for aeronautics purposes, as this has caused difficulty for some airport tenants in getting financing;

     (2)  Changing the effective date to June 29, 2012, to perpetuate the amendments made to section 261-7(a), Hawaii Revised Statutes; and

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Transportation and International Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2874, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2874, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Transportation and International Affairs,

____________________________

J. KALANI ENGLISH, Chair