Report Title:

Special Purpose Revenue Bond; Hawaiian Sugar & Transportation Cooperative

 

Description:

Authorizes $2,300,000 in special purpose revenue bonds for purchase of a sugar and molasses terminal facility at Nawiliwili, Kauai. (SB2228 HD1)

 

THE SENATE

S.B. NO.

2228

TWENTY-FIRST LEGISLATURE, 2002

S.D. 1

STATE OF HAWAII

H.D. 1


 

A BILL FOR AN ACT

 

relating to the issuance of special purpose revenue bonds to assist INDUSTRIAL enterprises.

 

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

SECTION 1. The legislature finds that the sugar and molasses terminal facility at Nawiliwili on the island of Kauai was constructed around 1950, and prior to 1994, provided receiving, storing, and shipping services for both sugar and molasses for all five producers on the island. With the demise of four of these operations by 2000, Gay & Robinson, Inc., is the only producer remaining to purchase the terminal facility.

Recently, Gay & Robinson, Inc., has exercised its option to purchase the sugar and molasses terminal facility being considered in this Act for $2,300,000. However the terms of the option agreement did not provide Gay & Robinson, Inc., a sufficient amount of time to secure long-term financing and the

$2,300,000 purchase price was funded from Gay & Robinson's existing credit line, which must be cleared annually. Having purchased the facility, Gay & Robinson, Inc., embarked on a search to find alternative financing or a buyer more favorably inclined to lease back the facility to Gay & Robinson, Inc., at favorable terms.

The Hawaiian Sugar & Transportation Cooperative has now agreed to purchase the facility from Gay & Robinson, Inc., with a lease back provision. Hawaiian Sugar & Transportation Cooperative is a non-profit cooperative whose sole purpose is to market and transport the sugar grown by the remaining two sugar plantations, Hawaiian Commercial & Sugar Company on Maui and Gay & Robinson, Inc., on Kauai. Issuance of special purpose revenue bonds to assist the Hawaiian Sugar & Transportation Cooperative in purchasing the facility will greatly improve the financial condition of Gay & Robinson, Inc., and position it for long-term financial viability.

Ownership of the terminal facility by the Hawaiian Sugar & Transportation Cooperative is beneficial for Gay & Robinson, Inc., the island of Kauai, and the State of Hawaii. Gay & Robinson, Inc., is the lone surviving sugar plantation on the island of Kauai. It is an economic force on Kauai, which currently has one of the higher unemployment rates in the State.

Gay & Robinson, Inc., is committed to the sugar industry and is increasing its investment by farming an additional four thousand three hundred acres of state-owned lands formerly leased to Kekaha Sugar. The company has hired forty additional employees and will hire more when the entire four thousand three hundred acres are fully cultivated. Gay & Robinson, Inc., now employs over three hundred full-time employees and provides subsidized housing for three hundred fifty current and retired employees. By remaining in business and hiring people during these depressed economic times, the company is contributing significantly to the economy of the island of Kauai and the State.

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 2. Pursuant to part V, 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 $2,300,000, in one or more series, for the purpose of assisting Hawaiian Sugar & Transportation Cooperative, a non-profit marketing and transportation cooperative, in the purchase of the sugar and molasses terminal facility at Nawiliwili on the island of Kauai. The legislature hereby finds and determines that the sugar and molasses terminal facility at Nawiliwili constitutes a project as defined in part V, chapter 39A, Hawaii Revised Statutes, and the financing thereof is assistance to an industrial enterprise.

SECTION 3. The special purpose revenue bonds and the refunding special purpose revenue bonds issued under this Act shall be issued pursuant to part V, chapter 39A, Hawaii Revised Statutes, relating to the power to issue special purpose revenue bonds to assist industrial enterprises.

SECTION 4. The department of budget and finance is authorized, from time to time, including times subsequent to June 30, 2005, 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 2 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 program described in section 2. 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 5. The authorization to issue special purpose revenue bonds under this Act shall lapse on June 30, 2005.

SECTION 6. This Act shall take effect upon its approval.