SB1536

SECTION 1. The legislature finds that the well-being of the State is substantially dependent on the efficient administration, development, management, and operation of its airports and air transportation infrastructure. The legislature further finds that responsibility for Hawaii's airport planning, management, marketing, and capital development functions is currently distributed among a number of agencies, including the department of transportation's airports division, Hawaii tourism authority, department of budget and finance, department of human resources development, board of land and natural resources, department of health (with respect to environmental concerns), and office of Hawaiian affairs (with respect to ceded land issues), among others. Distributed responsibility and involvement by multiple agencies, which sometimes have conflicting goals and priorities, results in inefficiency, delayed decision-making, and reduced effectiveness. The legislature believes that coordinated planning and development of the State's air transportation system and infrastructure would be achieved more effectively by establishing a separate state entity with jurisdiction and responsibility for aeronautics and the State's airports.

The legislature further finds that the establishment of a separate airports corporation would assist in the achievement of the following important statewide objectives:

(1) Maximizing the contribution of Hawaii's airports to the State's economy;

(2) Ensuring dedicated expert airport leadership, management continuity, and year-round decision-making, consistent with industry best practices;

(3) Improving administrative efficiency by streamlining administrative processes;

(4) Accelerating the planning and implementation of the state airports' capital improvement programs;

(5) Increasing the financial flexibility and strength of the State's airports;

(6) Increasing economic opportunities for the State, in collaboration with the Hawaii tourism authority;

(7) Increasing responsiveness to consumer needs, commercial opportunities, and economic demands; and

(8) Maximizing job creation within the State.

In addition, the management and administration of scarce and increasingly valuable airport resources is most effectively served by a separate airports corporation.

Accordingly, the purpose of this Act is to establish the Hawaii airports corporation, which shall assume all of the authority, powers, functions, duties, and responsibilities of the department of transportation related to aeronautics and airports, including responsibility for the development, management, operation, and maintenance of the State's airports, on and after the transfer completion date established by the Hawaii airports corporation pursuant to section 12(b) of this Act.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

HAWAII AIRPORTS CORPORATION

PART I. GENERAL PROVISIONS

§ -1 Definitions. As used in this chapter:

"Aircraft" shall have the same meaning as defined in section 261-1.

"Air navigation facility" shall have the same meaning as defined in section 261-1.

"Airport" shall have the same meaning as defined in section 261-1.

"Airport revenue" means all moneys paid into the airport revenue fund pursuant to section 261-5(a).

"Airports corporation" or "corporation" means the Hawaii airports corporation established by this chapter.

"Chief executive officer" means the chief executive officer of the Hawaii airports corporation.

§ -2 Airports corporation; establishment; board; members; chief executive officer. (a) There is established the Hawaii airports corporation to:

(1) Develop and implement management structures, policies, and procedures based on airport industry best practices;

(2) Efficiently develop, manage, operate, and maintain the State's airports and aeronautical facilities; and

(3) Administer the provisions of chapters 261, 261D, and 262 that are applicable to airports and aeronautical facilities.

The corporation shall be a body politic and corporate, and an instrumentality and agency of the State, placed within the department of transportation for administrative purposes only, and shall enjoy the same sovereign immunity available to the State. The corporation shall not be subject to supervision by the department of transportation or its director. Further, section 26-35(a)(1), (4), (5), and (6) shall not apply to the airports corporation.

(b) The powers of the airports corporation shall be vested in and exercised by a board of directors, which shall consist of nine voting members, who shall be appointed by the governor pursuant to section 26-34; provided that there shall be one member who is a resident of each county and one member representing aviation interests. Senate confirmation of members shall not be required. All members shall be appointed for terms of four years; provided that the governor shall stagger the initial terms pursuant to section 26‑34(a).

(c) Members shall have relevant business and management experience, including experience in one or more of the following disciplines: financial planning, budgeting, hospitality, tourism, commercial development, construction, marketing, law, aviation, non-aviation airport business or the cultural traditions and practices of native Hawaiians. It is the intent of the legislature that there shall be, as far as practicable, a wide cross-section of these disciplines represented by the board.

(d) The governor may appoint up to two of the at-large members without regard to the requirement in section 78-1(b) that appointive officers be residents of the State at the time of their appointment; provided that no more than two non-residents shall serve as members of the board at any time.

(e) Notwithstanding section 26-34(a) and (b), all members of the board shall continue in office until their respective successors have been appointed; provided that no member shall serve more than eight consecutive years.

(f) No board member appointed under this section shall be an officer or employee of the State or a county.

(g) Each board member shall serve without pay and shall be reimbursed for necessary out-of-pocket expenses incurred while attending meetings and otherwise discharging the member's board related responsibilities.

(h) The airports corporation shall be headed by a single executive to be known as the chief executive officer of the Hawaii airports corporation, who shall:

(1) Not be a member of the board;

(2) Be exempt from chapters 76 and 89; and

(3) Receive a salary fixed by the board.

(i) The chief executive officer:

(1) Shall be selected based on criteria approved by the board, including experience in airport management at an executive level at a large-hub or medium-hub airport within the United States, management of large-scale capital programs, and domestic and international air service development;

(2) Shall be appointed by an affirmative vote of not less than five members of the board;

(3) Shall be employed subject to a formal contract, the terms of which shall be approved by the board; provided that the terms shall include provisions for the removal of the chief executive officer whether with or without cause;

(4) May be removed from office only by a vote of not less than five members of the board; provided that the basis for removal shall be consistent with the terms of the chief executive officer's employment contract;

(5) Shall have the powers as described in this chapter and chapters 261, 261D, and 262, as may be delegated by the board;

(6) Except when excused by the board, shall attend all meetings of the board, keep a record of the proceedings, and maintain and be the custodian of the official seal of the corporation and all books, records, documents, and papers filed with the corporation;

(7) Shall direct and supervise the corporation's administrative and operational affairs in accordance with the directives of the board;

(8) Shall approve all accounts for salaries and allowable expenses of the corporation;

(9) Shall do all things necessary, as directed by the board, to carry out the powers and duties conferred upon the corporation by this chapter and chapters 261, 261D, and 262.

(j) Upon the vacancy of the position of the chief executive officer, the board of directors shall designate a deputy executive officer or other employee of the corporation to serve as the chief executive officer of the corporation until the vacancy is filled by the board. This interim chief executive officer shall have all of the powers and responsibilities, and receive the salary, of the chief executive officer.

(k) The number of members of the board necessary to constitute a quorum to do business shall be five members, and unless specified elsewhere in this chapter, the concurrence of five members of the board shall be necessary to make any action of the board valid.

§ -3 Powers; generally. (a) The Hawaii airports corporation, by and through its board of directors:

(1) Shall exercise power and control over all airports, air navigation facilities, buildings, and other facilities that the corporation is responsible for managing, operating, or controlling under the provisions of this chapter and chapters 261, 261D, and 262;

(2) Shall provide as appropriate for the landing, taking-off, and servicing of aircraft, and the loading and unloading of passengers and cargo at all airports under the control of the corporation;

(3) Shall establish performance targets and performance standards for all state airports to achieve the highest levels of customer service;

(4) Shall ensure that appropriate mission statements, business plans, minimum development standards, and strategic goals are established and that progress towards their accomplishment is regularly assessed and reported;

(5) Shall develop an organization and management structure to best accomplish the goals of the Hawaii airport system and the corporation;

(6) Shall be exempt from the provisions of chapter 103D, provided that:

(A) A chief procurement officer position shall be established to oversee a centralized set of procurement professionals to conduct procurement;

(B) The board of directors shall maintain internal policies and procedures for the timely and efficient procurement of goods and services, including planning, engineering, and construction services, to include post-award contract management and oversight procedures, that are consistent with the goals of public accountability and public procurement practices;

(D) The corporation shall implement and maintain an electronic procurement system to ensure electronic posting, to include requisition-to-check, contract management, and spend analysis modules. All solicitations, including any bid openings, and additional solicitation documents shall be publicly available online;

(E) The corporation shall develop key performance indicators covering the following four areas:

(i) Effective management and increased efficiency of the procurement process;

(ii) Contract management and supplier performance;

(iii) Transparency, openness, and accountability of procurement processes; and

(iv) Professionalism of the procurement workforce;

(F) The corporation shall develop a training and procurement delegation system;

(G) Professional services contracts for licensees under chapter 464 shall be procured in accordance with section 103D-304; whereas all other services may be procured using best value competitive proposals and using, insofar as practical, deliverables as a payment method and limiting use of time and materials contracts;

(H) Cost plus percentage of cost type contracts shall be disallowed;

(I) Insofar as practical, and based on specifications developed, adequate and reasonable competition of no fewer than three proposals shall be solicited for each project;

(J) Factors, including quality, warranty, delivery, and full lifecycle costs to include handover, surge, and disaster preparedness factors, and a best-value award, to include a past performance evaluation factor, shall be considered in determining the offeror with the most advantageous proposal;

(K) The procurement requirements shall not be artificially divided or parceled so as to avoid competitive bidding or competitive proposals; and

(L) The corporation shall implement a dispute resolution process for procurement award and post-award contract actions.

(7) Shall have an official seal and may alter the official seal at its pleasure;

(8) May make, execute, or assume contracts, leases, and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter and chapters 261, 261D, and 262;

(9) Shall establish bylaws for its organization and internal management;

(10) Shall adopt rules pursuant to chapter 91 as necessary to implement the provisions of this chapter and chapters 261, 261D, and 262;

(11) Shall prepare and adopt the corporation's operating and capital budgets;

(12) May own, purchase, lease, exchange, or otherwise acquire property, whether real, personal, or mixed, tangible or intangible, and any interest therein, in the name of the corporation, and may assign, exchange, transfer, convey, lease, sublease, or encumber the same or any project, improvement, or facility related thereto; provided that the lands to which the corporation holds title shall not be subject to chapter 171; provided further that any sale, gift, or exchange of real property shall be subject to the terms, conditions, and restrictions applicable to the sale, gift, or exchange of public lands in section 171-50 and 171-64.7; and provided further that any lease, sublease permit, or other encumbrance for any real property shall be issued in accordance with administrative rules adopted by the corporation pursuant to chapter 91;

(13) May procure insurance against any loss in connection with its property and other assets and operations, in amounts and from insurers as it deems desirable; or provide for self-insurance;

(14) May accept and receive gifts or grants in any form from any person, public entity, or source; provided that the grants and gifts shall be used for airports corporation purposes;

(15) Shall take all actions necessary under emergencies declared by the governor;

(16) Shall assume from the department of transportation:

(A) That:

(i) Certain Certificate of the Director of Transportation Providing for the Issuance of State of Hawaii Airports System Revenue Bonds dated as of May 1, 1969, relating to certain revenue bonds and other obligations;

(ii) Certain Indenture of Trust dated as of December 1, 2013, between the department of transportation and U.S. Bank National Association relating to certain certificates of participation; and

(iii) Certain Indenture of Trust dated as of August 1, 2014, between the department of transportation and MUFG Union Bank, N.A., relating to certain customer facility charge revenue bonds, each as supplemented and amended to date; and

(B) The bonds, notes, and other obligations of the department of transportation outstanding under, as well as the covenants, restrictions, and other requirements set forth in, those documents;

(17) Shall adopt policies and procedures designed to ensure continuing compliance with the terms of the documents in paragraph (16) for so long as they are applicable;

(18) Shall fix, impose, prescribe, and collect rates, rentals, fees, or charges for the lease, use, and services of its airport facilities at least sufficient to pay the costs of operation, maintenance, and repair, if any, and the required payments of the principal of and interest on all bonds, notes, or other obligations issued or assumed by the airports corporation and reserves therefor; provided that the rates, rentals, fees, or charges are established at an open meeting subject to the requirements of chapter 92;

(19) Subject to the provisions of the documents assumed by the corporation under paragraph (16)(A) above, may allot any and all airport revenue and issue revenue bonds, refunding revenue bonds, special facility revenue bonds, bond anticipation notes, and other lawfully authorized obligations of the State in its name and secured by the revenue, or user taxes, or any combination of both, of an undertaking or loan program pursuant to chapter 39, but not in excess of the principal amounts as are necessary for its purposes;

(20) May invest and secure its moneys;

(21) May exercise the power of eminent domain pursuant to chapter 101 and in accordance with sections 261-31 to 261-36, to acquire real property for the corporation with which to carry out the provisions of this chapter and chapters 261, 261D, or 262;

(22) Shall establish and maintain an appropriate system of accounts for the corporation;

(23) Shall cooperate with the department of land and natural resources to provide an annual accounting of all receipts from lands described in section 5(f) of the Admission Act, Public Law 86-3, for the prior fiscal year, pursuant to section 5 of Act 178, Session Laws of Hawaii 2006; and

(24) May do any and all things necessary to exercise the powers and perform the duties conferred upon the corporation by this chapter and chapters 261, 261D, and 262.

(b) The corporation shall not be subject to chapters 36, 37, 37D, 38, and 40, except for section 36-28.5 and as otherwise provided in this chapter and chapter 261.

(c) The airports corporation may sue and be sued in its corporate name. Notwithstanding any other law to the contrary, all claims arising out of the acts or omissions of the airports corporation or the members of its board, its officers, or its employees, including claims permitted against the State under chapter 661, part I, and claims for torts permitted against the State under chapter 662, may be brought only pursuant to this section and only against the airports corporation. However, the airports corporation shall be subject to suit only in the manner provided by law for suits against the State, including section 661-11. All defenses available to the State, as well as all limitations on actions against the State, shall be applicable to the airports corporation.

The board of directors, upon the advice of its attorney, may arbitrate, compromise, or settle any claim, action, or suit brought against the airports corporation pursuant to this section. Any claim compromised or settled under this subsection shall be payable solely from the moneys and property of the airports corporation and shall not constitute a general obligation of the State or be secured directly or indirectly by the full faith and credit of the State or the general credit of the State or by any revenue or taxes of the State. Nothing in this subsection shall preclude the board of directors from requesting legislative appropriations to fund the settlement of any claim or judgment against the airports corporation or its officers, employees, or agents.

Rights and remedies conferred by this section shall not be construed to authorize any other claim, suit, or action against the State. In addition, a judgment, compromise, or settlement in an action brought against the airports corporation under this section shall constitute a complete bar to any action brought by the claimant, by reason of the same subject matter, against the State or an officer or employee of the airports corporation.

(d) The corporation shall be a "jurisdiction" and an "appointing authority" under chapter 76, and an "appropriate authority" for those of its officers and employees who are excluded employees under chapter 89C. In addition to its chief executive officer, the corporation may employ executive officers, including a chief procurement officer appointed by the chief executive officer, who are qualified to fill positions established in the bylaws of the corporation adopted by the board of directors, to perform functions and exercise powers assigned by the bylaws or delegated by the board or the chief executive officer. The other executive officers of the corporation, and up to fifteen additional specially qualified employees appointed by the chief executive officer shall be exempt from chapters 76 and 89. All other persons employed by the corporation shall be subject to chapters 76 and 89, and rules adopted to implement those provisions, unless expressly exempted from the civil service under chapter 76 or excluded from collective bargaining under chapter 89. The officers and personnel of the corporation shall be included in all benefit programs applicable to officers and employees of the State.

(e) The corporation and its corporate existence shall continue until terminated by law; provided that no termination shall take effect as long as bonds or other obligations issued or assumed by the corporation are outstanding, unless adequate provision has been made for the payment or satisfaction thereof. Upon termination of the existence of the corporation, all of the rights and properties of the corporation then remaining shall pass to and vest in the State in the manner prescribed by law.

PART II. BUDGET AND FINANCE

§ -11 Exemptions. The airport revenue fund, passenger facility charge special fund, and rental motor vehicle customer facility charge special fund shall be exempt from chapters 36, 37, 37D, and 40.

§ -12 Fiscal provisions. (a) The corporation's board of directors shall establish guidelines for preparing the corporation's annual operating and capital budget proposals. The guidelines shall take into account anticipated receipts, surpluses, reserves, and funds from any other source, on deposit in or available for deposit into the airport revenue fund, the passenger facility charge special fund, the rental motor vehicle customer facility charge special fund, or any other special or revolving fund that the legislature may establish for the corporation.

(b) The corporation shall submit by of every year its biennium and supplemental operating and capital budget proposals to the department of transportation, which shall transmit those budget proposals to the governor.

(c) Along with its budget proposals, the corporation shall provide an annual report of the income to and the expenditures from the airport revenue fund, the passenger facility charge special fund, the rental motor vehicle customer facility charge special fund, and any other special or revolving fund administered by the corporation. The corporation shall provide a copy of its annual report to the legislature at least twenty days prior to the convening of each regular session.

(d) The supporting documents for each budget proposal shall include the annual report, but need not include any other information, except when state general funds are requested.

(e) Notwithstanding sections 37-71 and 37-72, the governor shall include in the executive budget proposals, separately for both the corporation's operating and capital budget proposals, one lump sum for each means or source of funds in the amounts specified in the budget proposals transmitted to the governor by the department of transportation pursuant to subsection (b).

(f) The legislature shall appropriate one lump sum for each means or source of funding for the corporation's operating budget and for the corporation's capital budget.

§ -13 Budget oversight. The corporation's operating and capital budgets shall not be subject to review or approval by the governor or any agency of the executive branch, except where state general funds are requested.

§ -14 Accounts; depositories. (a) Appropriations for the corporation shall not be subject to any allotment system or requirements. The director of finance shall notify the corporation and the comptroller that all of the appropriations for the corporation for the fiscal year have been allotted and are available for expenditure as soon as possible, and in no event more than three business days, after the general or supplemental appropriations act is effective.

(b) Moneys in the airport revenue fund, passenger facility charge special fund, and rental motor vehicle customer facility charge special fund may be deposited in depositories other than the state treasury; provided that the airports corporation shall:

(1) Consult with the director of finance before selecting a depository for the corporation's funds; and

(2) Submit copies of annual statements from each of the depositories in which the moneys from the funds are deposited to the director of finance.

§ -15 Expenditures in excess of appropriations. If in any fiscal year the amount of revenues deposited into the airport revenue fund exceeds the amount appropriated from that fund for that year, the board of directors of the corporation may approve expenditures in excess of the amount appropriated, up to the amount by which revenues for that fund exceed the appropriations from that fund for a fiscal year.

§ -16 Issuance of bonds. On an annual basis, and upon request of the corporation, the legislature shall authorize one lump sum for each means or source of funds for each of the following types of bonds to be issued by the corporation: revenue bonds, refunding revenue bonds, and special facility revenue bonds."

§ -17 Audits. The auditor shall conduct management and financial audits of the corporation for fiscal year 2023 and every second year thereafter."

SECTION 3. Section 26-19, Hawaii Revised Statutes, is amended to read as follows:

"§26-19 Department of transportation. The department of transportation shall be headed by a single executive to be known as the director of transportation. The department shall establish, maintain, and operate transportation facilities of the State, including highways, [~~airports,~~] harbors, and such other transportation facilities and activities, other than airports and aeronautics, as may be authorized by law.

The department shall plan, develop, promote, and coordinate various transportation systems management programs that shall include, but not be limited to, alternate work and school hours programs, bicycling programs, and ridesharing programs.

The department shall develop and promote ridesharing programs which shall include but not be limited to, carpool and vanpool programs, and may assist organizations interested in promoting similar programs, arrange for contracts with private organizations to manage and operate these programs, and assist in the formulation of ridesharing arrangements. Ridesharing programs include informal arrangements in which two or more persons ride together in a motor vehicle.

[~~The functions and authority heretofore exercised by the department of public works with respect to highways are transferred to the department of transportation established by this chapter.~~

On July 1, 1961, the Hawaii aeronautics commission, the board of harbor commissioners and the highway commission shall be abolished and their remaining functions, duties, and powers shall be transferred to the department of transportation.]"

SECTION 4. Section 28-8.3, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) No department of the State other than the attorney general may employ or retain any attorney, by contract or otherwise, for the purpose of representing the State or the department in any litigation, rendering legal counsel to the department, or drafting legal documents for the department; provided that the foregoing provision shall not apply to the employment or retention of attorneys:

(1) By the public utilities commission, the labor and industrial relations appeals board, and the Hawaii labor relations board;

(2) By any court or judicial or legislative office of the State; provided that if the attorney general is requested to provide representation to a court or judicial office by the chief justice or the chief justice's designee, or to a legislative office by the speaker of the house of representatives and the president of the senate jointly, and the attorney general declines to provide such representation on the grounds of conflict of interest, the attorney general shall retain an attorney for the court, judicial, or legislative office, subject to approval by the court, judicial, or legislative office;

(3) By the legislative reference bureau;

(4) By any compilation commission that may be constituted from time to time;

(5) By the real estate commission for any action involving the real estate recovery fund;

(6) By the contractors license board for any action involving the contractors recovery fund;

(7) By the office of Hawaiian affairs;

(8) By the department of commerce and consumer affairs for the enforcement of violations of chapters 480 and 485A;

(9) As grand jury counsel;

(10) By the Hawaii health systems corporation, or its regional system boards, or any of their facilities;

(11) By the auditor;

(12) By the office of ombudsman;

(13) By the insurance division;

(14) By the University of Hawaii;

(15) By the Kahoolawe island reserve commission;

(16) By the division of consumer advocacy;

(17) By the office of elections;

(18) By the campaign spending commission;

(19) By the Hawaii tourism authority, as provided in section 201B-2.5;

(20) By the division of financial institutions;

(21) By the office of information practices; [or]

(22) By the Hawaii airports corporation; or

[~~(22)~~] (23) By a department, if the attorney general, for reasons deemed by the attorney general to be good and sufficient, declines to employ or retain an attorney for a department; provided that the governor waives the provision of this section."

2. By amending subsection (c) to read:

"(c) Every attorney employed by any department on a full-time basis, except an attorney employed by the public utilities commission, the labor and industrial relations appeals board, the Hawaii labor relations board, the office of Hawaiian affairs, the Hawaii health systems corporation or its regional system boards, the department of commerce and consumer affairs in prosecution of consumer complaints, insurance division, the division of consumer advocacy, the University of Hawaii, the Hawaii tourism authority as provided in section 201B-2.5, the office of information practices, the Hawaii airports corporation, or as grand jury counsel, shall be a deputy attorney general."

SECTION 5. Section 41D-2, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Any provision in this section to the contrary notwithstanding, the Hawaii airports corporation, the University of Hawaii (as to casualty insurance risks only), the Research Corporation of the University of Hawaii (as to casualty insurance risks only), the public health facilities of the department of health (with respect to medical malpractice risks only), and the Hawaii health systems corporation and its regional system boards shall be exempt from the requirements of this chapter."

SECTION 6. Section 76-11, Hawaii Revised Statutes, is amended by amending the definition of "jurisdiction" to read as follows:

""Jurisdiction" means the State, the city and county of Honolulu, the county of Hawaii, the county of Maui, the county of Kauai, the judiciary, the department of education, the University of Hawaii, the Hawaii airports corporation, and the Hawaii health systems corporation."

SECTION 7. Section 76-16, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The civil service to which this chapter applies shall comprise all positions in the State now existing or hereafter established and embrace all personal services performed for the State, except the following:

(1) Commissioned and enlisted personnel of the Hawaii National Guard as such, and positions in the Hawaii National Guard that are required by state or federal laws or regulations or orders of the National Guard to be filled from those commissioned or enlisted personnel;

(2) Positions filled by persons employed by contract where the director of human resources development has certified that the service is special or unique or is essential to the public interest and that, because of circumstances surrounding its fulfillment, personnel to perform the service cannot be obtained through normal civil service recruitment procedures. Any such contract may be for any period not exceeding one year;

(3) Positions that must be filled without delay to comply with a court order or decree if the director determines that recruitment through normal recruitment civil service procedures would result in delay or noncompliance, such as the Felix-Cayetano consent decree;

(4) Positions filled by the legislature or by either house or any committee thereof;

(5) Employees in the office of the governor and office of the lieutenant governor, and household employees at Washington Place;

(6) Positions filled by popular vote;

(7) Department heads, officers, and members of any board, commission, or other state agency whose appointments are made by the governor or are required by law to be confirmed by the senate;

(8) Judges, referees, receivers, masters, jurors, notaries public, land court examiners, court commissioners, and attorneys appointed by a state court for a special temporary service;

(9) One bailiff for the chief justice of the supreme court who shall have the powers and duties of a court officer and bailiff under section 606-14; one secretary or clerk for each justice of the supreme court, each judge of the intermediate appellate court, and each judge of the circuit court; one secretary for the judicial council; one deputy administrative director of the courts; three law clerks for the chief justice of the supreme court, two law clerks for each associate justice of the supreme court and each judge of the intermediate appellate court, one law clerk for each judge of the circuit court, two additional law clerks for the civil administrative judge of the circuit court of the first circuit, two additional law clerks for the criminal administrative judge of the circuit court of the first circuit, one additional law clerk for the senior judge of the family court of the first circuit, two additional law clerks for the civil motions judge of the circuit court of the first circuit, two additional law clerks for the criminal motions judge of the circuit court of the first circuit, and two law clerks for the administrative judge of the district court of the first circuit; and one private secretary for the administrative director of the courts, the deputy administrative director of the courts, each department head, each deputy or first assistant, and each additional deputy, or assistant deputy, or assistant defined in paragraph (16);

(10) First deputy and deputy attorneys general, the administrative services manager of the department of the attorney general, one secretary for the administrative services manager, an administrator and any support staff for the criminal and juvenile justice resources coordination functions, and law clerks;

(11) (A) Teachers, principals, vice-principals, complex area superintendents, deputy and assistant superintendents, other certificated personnel, not more than twenty noncertificated administrative, professional, and technical personnel not engaged in instructional work;

(B) Effective July 1, 2003, teaching assistants, educational assistants, bilingual/bicultural school-home assistants, school psychologists, psychological examiners, speech pathologists, athletic health care trainers, alternative school work study assistants, alternative school educational/supportive services specialists, alternative school project coordinators, and communications aides in the department of education;

(D) Members of the faculty of the University of Hawaii, including research workers, extension agents, personnel engaged in instructional work, and administrative, professional, and technical personnel of the university;

(12) Employees engaged in special, research, or demonstration projects approved by the governor;

(13) (A) Positions filled by inmates, patients of state institutions, persons with severe physical or mental disabilities participating in the work experience training programs;

(B) Positions filled with students in accordance with guidelines for established state employment programs; and

(C) Positions that provide work experience training or temporary public service employment that are filled by persons entering the workforce or persons transitioning into other careers under programs such as the federal Workforce Investment Act of 1998, as amended, or the Senior Community Service Employment Program of the Employment and Training Administration of the United States Department of Labor, or under other similar state programs;

(14) A custodian or guide at Iolani Palace, the Royal Mausoleum, and Hulihee Palace;

(15) Positions filled by persons employed on a fee, contract, or piecework basis, who may lawfully perform their duties concurrently with their private business or profession or other private employment and whose duties require only a portion of their time, if it is impracticable to ascertain or anticipate the portion of time to be devoted to the service of the State;

(16) Positions of first deputies or first assistants of each department head appointed under or in the manner provided in section 6, article V, of the Hawaii State Constitution; [~~three~~] two additional deputies or assistants either in charge of the highways[,] and harbors[~~, and airports~~] divisions or other functions within the department of transportation as may be assigned by the director of transportation, with the approval of the governor; four additional deputies in the department of health, each in charge of one of the following: behavioral health, environmental health, hospitals, and health resources administration, including other functions within the department as may be assigned by the director of health, with the approval of the governor; an administrative assistant to the state librarian; and an administrative assistant to the superintendent of education;

(17) Positions specifically exempted from this part by any other law; provided that:

(A) Any exemption created after July 1, 2014, shall expire three years after its enactment unless affirmatively extended by an act of the legislature; and

(B) All of the positions defined by paragraph (9) shall be included in the position classification plan;

(18) Positions in the state foster grandparent program and positions for temporary employment of senior citizens in occupations in which there is a severe personnel shortage or in special projects;

(19) Household employees at the official residence of the president of the University of Hawaii;

(20) Employees in the department of education engaged in the supervision of students during meal periods in the distribution, collection, and counting of meal tickets, and in the cleaning of classrooms after school hours on a less than half-time basis;

(21) Employees hired under the tenant hire program of the Hawaii public housing authority; provided that not more than twenty-six per cent of the authority's workforce in any housing project maintained or operated by the authority shall be hired under the tenant hire program;

(22) Positions of the federally funded expanded food and nutrition program of the University of Hawaii that require the hiring of nutrition program assistants who live in the areas they serve;

(23) Positions filled by persons with severe disabilities who are certified by the state vocational rehabilitation office that they are able to perform safely the duties of the positions;

(24) The sheriff;

(25) A gender and other fairness coordinator hired by the judiciary;

(26) Positions in the Hawaii National Guard youth and adult education programs;

(27) In the state energy office in the department of business, economic development, and tourism, all energy program managers, energy program specialists, energy program assistants, and energy analysts; [~~and~~]

(28) Administrative appeals hearing officers in the department of human services[.]; and

(29) The chief executive officer of the Hawaii airports corporation, all other executive officers the chief executive officer may appoint pursuant to section ‑3(d), and fifteen positions that the chief executive officer is authorized to fill by appointing specially qualified personnel pursuant to section ‑3(d).

The director shall determine the applicability of this section to specific positions.

Nothing in this section shall be deemed to affect the civil service status of any incumbent as it existed on July 1, 1955."

SECTION 8. Section 89C-1.5, Hawaii Revised Statutes, is amended by amending the definition of "appropriate authority" to read as follows:

""Appropriate authority" means the governor, the respective mayors, the chief justice of the supreme court, the board of education, the board of regents, the state public charter school commission, the Hawaii health systems corporation board, the auditor, the ombudsman, the board of directors of the Hawaii airports corporation, and the director of the legislative reference bureau. These individuals or boards may make adjustments for their respective excluded employees."

SECTION 9. Section 171-2, Hawaii Revised Statutes, is amended to read as follows:

"§171-2 Definition of public lands. "Public lands" means all lands or interest therein in the State classed as government or crown lands previous to August 15, 1895, or acquired or reserved by the government upon or subsequent to that date by purchase, exchange, escheat, or the exercise of the right of eminent domain, or in any other manner; including lands accreted after May 20, 2003, and not otherwise awarded, submerged lands, and lands beneath tidal waters that are suitable for reclamation, together with reclaimed lands that have been given the status of public lands under this chapter, except:

(1) Lands designated in section 203 of the Hawaiian Homes Commission Act, 1920, as amended;

(2) Lands set aside pursuant to law for the use of the United States;

(3) Lands being used for roads and streets;

(4) Lands to which the United States relinquished the absolute fee and ownership under section 91 of the Hawaiian Organic Act prior to the admission of Hawaii as a state of the United States unless subsequently placed under the control of the board of land and natural resources and given the status of public lands in accordance with the state constitution, the Hawaiian Homes Commission Act, 1920, as amended, or other laws;

(5) Lands to which the University of Hawaii holds title;

(6) Lands to which the Hawaii housing finance and development corporation in its corporate capacity holds title;

(7) Lands to which the Hawaii community development authority in its corporate capacity holds title;

(8) Lands to which the department of agriculture holds title by way of foreclosure, voluntary surrender, or otherwise, to recover moneys loaned or to recover debts otherwise owed the department under chapter 167;

(9) Lands that are set aside by the governor to the Aloha Tower development corporation; lands leased to the Aloha Tower development corporation by any department or agency of the State; or lands to which the Aloha Tower development corporation holds title in its corporate capacity;

(10) Lands that are set aside by the governor to the agribusiness development corporation; lands leased to the agribusiness development corporation by any department or agency of the State; or lands to which the agribusiness development corporation in its corporate capacity holds title;

(11) Lands to which the Hawaii airports corporation holds title;

[~~(11)~~] (12) Lands to which the Hawaii technology development corporation in its corporate capacity holds title; [~~and~~]

[~~(12)~~] (13) Lands to which the department of education holds title;

provided that, except as otherwise limited under federal law and except for state land used as an airport as defined in section 262-1, public lands shall include the air rights over any portion of state land upon which a county mass transit project is developed after July 11, 2005."

SECTION 10. On and after the transfer completion date established by the Hawaii airports corporation in section 12(b) of this Act, and until the revisor of statutes makes the amendments to chapters 102, 261, 261D, and 262, Hawaii Revised Statutes, described in this section, every reference to the department of transportation or "department" or its role in awarding concessions in chapters 102, 261, 261D, and 262, Hawaii Revised Statutes, shall be a reference to the Hawaii airports corporation, and every reference to the director of transportation or "department" or the director's role in awarding concessions in chapters 102, 261, 261D, and 262, Hawaii Revised Statutes, shall be a reference to the board of directors or the chief executive officer of the Hawaii airports corporation depending upon which of the two is authorized to act under the new chapter added to the Hawaii Revised Statutes in section 2 of this Act. After the transfer completion date but no later than when the subsequent supplements to the Hawaii Revised Statutes are prepared, the revisor of statutes shall substitute the phrase "board of directors" or "chief executive officer" for the terms "director" or "director of transportation", depending upon which of the two is authorized to act under the new chapter added to the Hawaii Revised Statutes in section 2 of this Act; the term "Hawaii airports corporation" for the term "department of transportation", the term "corporation" for the term "department", and shall delete the definition of "director", in chapters 261 and 262, Hawaii Revised Statutes.

SECTION 11. The Hawaii airports corporation shall succeed to the jurisdiction, powers, and responsibilities of the department of transportation over aeronautics and airports, including all of the functions relating to airports and aeronautics performed by the department and its airports division, on the transfer completion date published by the Hawaii airports corporation pursuant to section 12(b) of this Act, which date shall be no later than December 31, 2022.

On the transfer completion date, the Hawaii airports corporation shall assume from the department of transportation:

(1) That:

(A) Certain Certificate of the Director of Transportation Providing for the Issuance of State of Hawaii Airports System Revenue Bonds dated as of May 1, 1969, relating to certain revenue bonds and other obligations;

(B) Certain Indenture of Trust dated as of December 1, 2013, between the department of transportation and U.S. Bank National Association relating to certain certificates of participation; and

(C) Certain Indenture of Trust dated as of August 1, 2014, between the department of transportation and MUFG Union Bank, N.A., relating to certain customer facility charge revenue bonds, each as supplemented and amended to date; and

(2) The bonds, notes, and other obligations of the department of transportation outstanding under, as well as the covenants, restrictions, and other requirements set forth in, those documents.

Thereafter, to the extent that the Hawaii airports corporation is authorized under this Act to exercise powers and duties that are also granted to other departments, offices, or boards of the State, with respect to airports and aeronautical facilities, the Hawaii airports corporation shall exclusively exercise those powers and perform those duties.

SECTION 12. (a) Within ninety days of the effective date of this Act, the governor shall designate a representative who shall facilitate the corporation's orderly succession to the jurisdiction, powers, functions, rights, benefits, obligations, assets, liabilities, funds, accounts, contracts, and all other things currently held, used, incurred, or performed by the department of transportation, its director and staff, and its airports division, in administering and exercising the authority and fulfilling the responsibilities authorized or conferred upon the department of transportation and the director of transportation, by chapters 102, 261, 261D, and 262, Hawaii Revised Statutes.

Within one hundred eighty days of the effective date of this Act, the governor shall appoint the members of the board of directors of the Hawaii airports corporation.

To facilitate the corporation's timely assumption of the department of transportation's authority and responsibilities, including all of the department's associated bonds, notes, and obligations as described in paragraph (7) below, the department of transportation, the department of accounting and general services, the department of human resources development, the state procurement office, and any other state department or agency, if requested by the corporation, shall enter into a memorandum of understanding with the corporation to:

(1) Provide administrative support services for the corporation pending the transfer of employees from the department of transportation to the Hawaii airports corporation pursuant to section 16 of this Act;

(2) Develop a policy and set of procurement procedures that foster accountability, transparency and oversight of contracts, to include compliance with federal procurement requirements;

(3) Assist the corporation with the organization of its human resources development functions, including establishing:

(A) A human resources office;

(B) The corporation's civil service and civil service positions, and the classification system, merit appeals board, recruitment system, performance appraisal system, and the administrative rules, policies, standards, and procedures, including internal complaint procedures, adopted to support its civil service; and

(C) The corporation's exempt and excluded positions, and guidelines, procedures, and policies for filling them, and compensating the officers and employees who fill them;

(4) Assist the corporation in establishing its accounting, budgeting, fund management, and communication and electronic information systems, and creating appropriate interfaces between the corporation's accounting, budgeting, fund management, communication and electronic information systems, and those of the department of transportation, and other state agencies;

(5) Assist the corporation in identifying the plans and reports that departments and agencies administratively attached to a department are required to prepare for the governor, the legislature, or another state department or agency with respect to aeronautics or the State's airport system; determining whether those plans and reports have been prepared and will be transferred to the corporation on the transfer completion date; and preparing the same for the corporation, if they do not exist;

(6) Expeditiously transfer or otherwise facilitate the corporation's acquisition or assumption of all of the powers, functions, rights, benefits, obligations, assets, funds, accounts, contracts, and all other things held, used, incurred, or performed by the department of transportation, its director and staff, and its airports division, in exercising the authority and fulfilling the responsibilities conferred upon the department of transportation and the director of transportation by chapters 102, 261, 261D, and 262, Hawaii Revised Statutes;

(7) Assign and transfer:

(A) That certain Certificate of the Director of Transportation Providing for the Issuance of State of Hawaii Airports System Revenue Bonds dated as of May 1, 1969, relating to certain revenue bonds and other obligations;

(B) That certain Indenture of Trust dated as of December 1, 2013, between the department of transportation and U.S. Bank National Association relating to certain certificates of participation; and

(C) That certain Indenture of Trust dated as of August 1, 2014, between the department of transportation and MUFG Union Bank, N.A., relating to certain customer facility charge revenue bonds, each as supplemented and amended to date; the assumption of all indebtedness of the department of transportation heretofore issued and outstanding thereunder; and the adoption of policies and procedures designed to ensure continuing compliance with the terms thereof for so long as they are applicable; and

(8) Reimburse each cooperating department or agency for the cost of services provided under the memorandum of understanding.

(b) As soon as feasible, the Hawaii airports corporation, with the concurrence of the director of transportation and the governor, shall establish the transfer completion date, which shall be no later than December 31, 2022, and publish notice of the transfer completion date by:

(1) Publishing the notice in a daily publication of statewide circulation pursuant to section 1-28.5, Hawaii Revised Statutes;

(2) Posting a copy of the notice on an electronic calendar on a website maintained by the State;

(3) Providing a copy of the notice to the department of transportation, the Secretaries of the United States Department of Transportation and Department of Defense, the head of the Federal Aviation Administration, and the head of every other state department; and

(4) Posting the notice prominently at every airport and air navigation facility in the State.

All notices shall be published, distributed, or posted at least ninety days before the transfer completion date.

SECTION 13. It is the intent of this Act not to jeopardize the receipt of any federal aid nor to impair any existing federal income tax exemption to, security interest of, or obligation of the State or any agency thereof to the holders of any bonds or other obligations issued by the State or by any department or agency of the State, and to the extent, and only to the extent necessary to effectuate this intent, the governor may modify the strict provisions of this Act, but shall promptly report any modification with reasons therefor to the legislature at its next session thereafter for review by the legislature.

SECTION 14. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date. The department of transportation shall be responsible for any and all obligations, incurred by the department or its airports division in connection with the department's exercise of the authority and performance of the duties and responsibilities conferred upon it and its director by chapters 261, 261D, and 262, Hawaii Revised Statutes, until the time that the obligations, including any accounts payable, accrued paid time off, debt, capital leases, and other obligations incurred before the transfer completion date, have been assumed by the Hawaii airports corporation, which shall not occur prior to the transfer completion date. All collective bargaining disputes or claims against the department grounded in an act or omission, or an event that occurred prior to the transfer completion date shall remain the responsibility of the department of transportation. All liabilities arising out of the Hawaii airports corporation's exercise of the authority and performance of the duties and responsibilities conferred upon it and its chief executive officer by chapters 102, 261, 261D, and 262, Hawaii Revised Statutes, after the transfer completion date shall be the responsibility of the corporation. The assumption by the airports corporation of the bonds, notes, or other obligations of the department of transportation relating to the State's airports system shall be subject to the terms and provisions of any certificate, indenture, or resolution securing those bonds, notes, or other obligations. On the transfer completion date, the Hawaii airports corporation shall assume responsibility for all rights, duties, penalties, and proceedings of the department of transportation related to the State's airports system.

SECTION 15. The State of Hawaii pledges to and agrees with the holders of the bonds, notes, or other obligations of the department of transportation being assumed by the airports corporation on the transfer completion date and the holders of the bonds, notes, or other obligations of the airports corporation issued pursuant to chapter 37D or 39, Hawaii Revised Statutes, that the State shall not limit or alter the rights and powers vested in the Hawaii airports corporation so as to impair the terms of any contract made or assumed by the airports corporation with holders or in any way impair the rights and remedies of holders until bonds, notes, or other obligations, together with interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceedings by or on behalf of holders, are fully met and discharged. In addition, the State pledges to and agrees with the holders of the bonds, notes, or other obligations of the department of transportation being assumed by the airports corporation on the transfer completion date and the holders of the bonds, notes, or other obligations of the airports corporation issued pursuant to chapter 37D or 39, Hawaii Revised Statutes, that the State shall not limit or alter the basis on which the revenues or user taxes securing any bonds, notes, or other obligations issued or assumed by the airports corporation are to be received by the airports corporation, or the rights of the airports corporation to the use of the funds, so as to impair the terms of any contract securing the same. The airports corporation is authorized to include these pledges and agreements of the State in any contract with the holders of bonds, notes, or other obligations issued pursuant to chapter 37D or 39, Hawaii Revised Statutes.

SECTION 16. The Hawaii airports corporation shall recognize all bargaining units and collective bargaining agreements existing at the time of transfer to the corporation. All employees who are subject to chapter 76, Hawaii Revised Statutes, and occupy civil service positions and whose functions are transferred to the Hawaii airports corporation by this Act shall retain their civil service status, whether permanent or temporary. The employees shall be transferred to the corporation without loss of salary, seniority (except as prescribed by applicable collective bargaining agreements), retention points, prior service credits, any vacation and sick leave credits previously earned, and other rights, benefits, and privileges, in accordance with state personnel laws and this Act; provided that the employees meet applicable requirements for the class or position to which transferred or appointed, as applicable.

Any employee who, prior to this Act, is a member of a bargaining unit shall remain a member of that bargaining unit when future collective bargaining agreements are negotiated.

Any employee who, prior to this Act, is exempt from civil service and is transferred to the corporation as a consequence of this Act may retain the employee's exempt status, but shall not be appointed to a civil service position as a consequence of this Act. An exempt employee who is transferred by this Act shall not suffer any loss of prior service credit, vacation or sick leave credits previously earned, or other employee benefits or privileges as a consequence of this Act. The chief executive officer of the Hawaii airports corporation may prescribe the duties and qualifications of these employees and fix their salaries without regard to chapter 76, Hawaii Revised Statutes.

No employee included in a collective bargaining unit as an employee of the department of transportation shall be laid off as a consequence of this Act.

SECTION 17. On or no more than ninety days after the transfer completion date, all appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the department of transportation relating to the functions transferred to the Hawaii airports corporation shall be transferred with the functions to which they relate.

SECTION 18. All rules, policies, procedures, guidelines, and other material adopted or developed by the department of transportation to implement provisions of the Hawaii Revised Statutes that are reenacted or made applicable to the Hawaii airports corporation by this Act shall remain in full force and effect on and after the transfer completion date established pursuant to section 12(b) of this Act, until amended or repealed by the Hawaii airports corporation pursuant to chapter 91, Hawaii Revised Statutes. In the interim, every reference to the department of transportation or director of transportation in those rules, policies, procedures, guidelines, and other material is amended to refer to the Hawaii airports corporation or chief executive officer of the corporation, as appropriate.

SECTION 19. All deeds, executive orders, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the department of transportation, pursuant to the provisions of the Hawaii Revised Statutes, that are reenacted or made applicable to the Hawaii airports corporation by this Act shall remain in full force and effect. On the transfer completion date established pursuant to section 12(b) of this Act, every reference to the department of transportation in those deeds, executive orders, leases, contracts, loans, agreements, permits or other documents shall be construed as a reference to the Hawaii airports corporation or the board of directors of the corporation.

SECTION 20. There is appropriated out of the airport revenue fund the sum of $3,000,000 or so much thereof as may be necessary for fiscal year 2019-2020, and the sum of $ or so much thereof as may be necessary for fiscal year 2020-2021 to effect the transfer of functions from the department of transportation to the Hawaii airports corporation required by this Act.

The sums appropriated shall be expended by the Hawaii airports corporation to implement the provisions of this Act.

SECTION 21. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 22. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 23. This Act shall take effect on July 1, 2019.

INTRODUCED BY:	_____________________________
	BY REQUEST

THE SENATE	S.B. NO.	1536
THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII