REPORT TITLE:
Public-private partnerships 

DESCRIPTION:
Creates a public-private infrastructure program to transfer
projects to improve infrastructure systems and facilities from
the State and local governments to the private sector or to
expedite and allow the creation of infrastructure systems and
facilities.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
HOUSE OF REPRESENTATIVES                H.B. NO.140        
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO PUBLIC-PRIVATE INFRASTRUCTURE PARTNERSHIPS.


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

 1      SECTION 1.  The legislature finds and declares that:
 
 2      (1)  It is essential for the economic, social, and
 
 3           environmental well-being of the State and the
 
 4           maintenance of a high quality of life that the people
 
 5           of the State have access to efficient infrastructure
 
 6           facilities;
 
 7      (2)  The ability of the State and local governments to
 
 8           provide efficient infrastructure facilities will be
 
 9           enhanced by a public-private program enabling private
 
10           entities to undertake all or a portion of the study,
 
11           planning, design, development, financing, acquisition,
 
12           installation, construction, or improvement, operation,
 
13           and maintenance of infrastructure facilities;
 
14      (3)  A public-private infrastructure program will provide
 
15           benefits to both the State and private entities.
 
16           Public-private infrastructure facilities provide a
 
17           sound economic investment opportunity for the private
 
18           sector.  Such a program will provide the State and
 
19           local governments with increased access to property
 
20           development and project opportunities, financial and
 

 
Page 2                                                     
                                     H.B. NO.140        
                                                        
                                                        

 
 1           development expertise, and will supplement State and
 
 2           local infrastructure funds, allowing the State and
 
 3           local governments to use their limited resources for
 
 4           other needed projects;
 
 5      (4)  State and local governments should be permitted and
 
 6           encouraged to stimulate private investment in
 
 7           infrastructure facilities or portions thereof through
 
 8           the use of innovative agreements with the private
 
 9           sector.  Public entities should be vested with the
 
10           authority to solicit, evaluate, negotiate, and
 
11           administer public-private agreements with the private
 
12           sector relating to the planning, construction,
 
13           upgrading, or reconstruction of infrastructure systems
 
14           and facilities; and
 
15      (5)  State and local governments should be encouraged to
 
16           take advantage of new opportunities provided by federal
 
17           and state laws as such opportunities become available
 
18           to leverage available public funds as a means for
 
19           attracting private sector capital.
 
20      The purpose of this Act is to create a public-private
 
21 infrastructure program to transfer projects to improve
 
22 infrastructure systems and facilities from the public to the
 
23 private sector or to expedite and allow the creation of
 
24 infrastructure systems and facilities.
 

 
Page 3                                                     
                                     H.B. NO.140        
                                                        
                                                        

 
 1      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4                             "CHAPTER 
 
 5            PUBLIC-PRIVATE INFRASTRUCTURE PARTNERSHIPS
 
 6        -1 Definitions.  As used in this chapter, unless the
 
 7 context clearly requires otherwise:
 
 8      "Infrastructure systems and facilities" means capital-
 
 9 related improvements and additions to state or local
 
10 transportation and environmental infrastructure, including
 
11 highways, roads, bridges, vehicles and equipment, marine-related
 
12 facilities, park and ride lots, transit stations and equipment,
 
13 airports or aviation facilities, infrastructure management
 
14 systems, water treatment facilities, wastewater treatment
 
15 facilities, solid-waste facilities, and other infrastructure-
 
16 related investments.
 
17      "Private entity" means either individuals, companies, or
 
18 corporations, or any others except the State or a county.
 
19      "Public entity" means any department of the State or any
 
20 county.
 
21        -2 Project selection.(a)  A public entity may
 
22 solicit proposals from, and negotiate and enter into agreements
 
23 with, private entities to undertake as appropriate, together with
 

 
Page 4                                                     
                                     H.B. NO.140        
                                                        
                                                        

 
 1 the public entity and other public entities, all or a portion of
 
 2 the study, planning, design, construction, operation, and
 
 3 maintenance of infrastructure systems and facilities, using in
 
 4 whole or in part private sources of financing.
 
 5      (b)  Each proposal shall be weighed on its own merits, and
 
 6 each agreement shall be negotiated individually, and as a stand-
 
 7 alone project.
 
 8      (c)  Projects may be selected by the public and private
 
 9 entities at their discretion.
 
10      (d)  All projects designed, constructed, and operated under
 
11 this chapter shall comply with all applicable rules and statutes
 
12 in existence at the time the agreement is executed.
 
13      (e)  The State and the counties may consult with legal,
 
14 financial, and other experts within and outside government in the
 
15 negotiation and development of the agreements.
 
16        -3 Terms of agreement.(a)  Agreements shall provide
 
17 for private ownership of a project during the construction
 
18 period.
 
19      (b)  After completion and final acceptance of each project
 
20 or discrete segment thereof, the agreement shall provide for
 
21 public ownership of the infrastructure facilities and lease to
 
22 the private entity unless the public entity agrees to provide for
 
23 ownership of the facility by the private entity during the term
 
24 of the agreement.
 

 
Page 5                                                     
                                     H.B. NO.140        
                                                        
                                                        

 
 1      (c)  The public entity may lease each of the projects, or
 
 2 applicable project segments, to the private entities for
 
 3 operating purposes for up to fifty years per segment.
 
 4      (d)  The public entity may exercise any power possessed by
 
 5 it to facilitate the development, construction, financing
 
 6 operation, and maintenance of infrastructure projects under this
 
 7 chapter.
 
 8      (e)  Agreements for maintenance services entered into under
 
 9 this section shall provide for reimbursement for services
 
10 rendered by public entities.  Such reimbursement may be in cash
 
11 or in kind.
 
12      (f)  Agreements for police services under the agreement may
 
13 be entered into with any qualified law enforcement agency, and
 
14 shall provide for reimbursement for services rendered by that
 
15 agency.  Such reimbursement may be in cash or in kind.
 
16      (g)  The public entity may provide services for which it is
 
17 reimbursed, including preliminary planning, environmental
 
18 certification, and preliminary design.
 
19      (h)  The plans and specifications for each project
 
20 constructed under this section shall comply with the public
 
21 entity's standards for public projects, as adjusted to
 
22 accommodate innovative techniques.
 

 
 
 
Page 6                                                     
                                     H.B. NO.140        
                                                        
                                                        

 
 1      (i)  In the case of state transportation facilities, a
 
 2 facility constructed by and leased to a private entity is deemed
 
 3 to be a part of the state highway system for purposes of
 
 4 identification, maintenance, and enforcement of traffic laws and
 
 5 for the purposes of applicable sections of this chapter.
 
 6     (j)  Upon reversion of the facility to the public entity, the
 
 7 project must meet all applicable standards reasonably established
 
 8 by the public entity.
 
 9     (k)  Agreements shall address responsibility for
 
10 reconstruction or renovations that are required for a facility to
 
11 meet all applicable standards upon reversion of the facility to
 
12 the public entity.
 
13     (l)  For the purpose of facilitating these projects and to
 
14 assist the private entity in the financing, development,
 
15 construction, and operation of the infrastructure systems and
 
16 facilities, the agreements may include provision for the public
 
17 entity to exercise its authority, including:
 
18      (1)  The lease of facilities, rights of way, and airspace,
 
19           including airspace next to, above, or below the right
 
20           of way associated or to be associated with the private
 
21           entity's infrastructure facility;
 
22      (2)  Exercise of the power of eminent domain;
 

 
 
 
Page 7                                                     
                                     H.B. NO.140        
                                                        
                                                        

 
 1      (3)  Authority to negotiate acquisition of rights of way in
 
 2           excess of appraised value;
 
 3      (4)  Granting of development rights and opportunities;
 
 4      (5)  Granting of necessary easements and rights of access,
 
 5           issuance of permits and other authorizations, leasing
 
 6           existing rights of way or rights of way subsequently
 
 7           acquired with public or private financing;
 
 8      (6)  Protection from competition;
 
 9      (7)  Remedies in the event of default of either of the
 
10           parties;
 
11      (8)  Granting of contractual and real property rights;
 
12      (9)  Liability during construction and the term of the
 
13           lease; and
 
14     (10)  Other provisions deemed necessary by the public entity.
 
15      (m)  In consideration for the reversion rights in these
 
16 privately constructed facilities, the public entity may negotiate
 
17 a charge for the lease of airspace rights during the term of the
 
18 agreement.
 
19      (n)  If, after the expiration of this period, the public
 
20 entity continues to lease airspace rights to the private entity,
 
21 it shall do so at fair market value.
 
22      (o)  The agreement may also provide the private entity the
 
23 right of first refusal to undertake projects utilizing airspace
 
24 owned by the public entity in the vicinity of the project.
 

 
Page 8                                                     
                                     H.B. NO.140        
                                                        
                                                        

 
 1      (p)  Agreements under this section may include any
 
 2 contractual provision necessary to protect the project revenues
 
 3 required to repay the costs incurred to study, plan, design,
 
 4 finance, acquire, build, install, operate, enforce laws, and
 
 5 maintain infrastructure systems and facilities and that will not
 
 6 unreasonably inhibit or prohibit the development of additional
 
 7 infrastructure systems and facilities.
 
 8      (q)  Agreements under this section shall include provisions
 
 9 requiring that liability insurance coverage be secured and
 
10 maintained in amounts appropriate to protect the project's
 
11 viability and may address public entity for design and
 
12 construction liability where the public entity has approved
 
13 relevant design and construction plans.
 
14      (r)  Nothing in this chapter shall limit the right of the
 
15 public entity to render such advice and to make such
 
16 recommendations as it deems to be in the best interests of the
 
17 State and the public.
 
18        -4 Financial arrangements.(a)  The public entity may
 
19 enter into agreements using federal and public entity financing
 
20 in connection with the projects, including without limitation,
 
21 grants, loans, and other measures authorized by federal and state
 
22 law, and to do such things as necessary and desirable to maximize
 
23 the funding and financing, including the formation of a revolving
 
24 loan fund to implement this section.
 

 
Page 9                                                     
                                     H.B. NO.140        
                                                        
                                                        

 
 1      (b)  Agreements entered into under this section shall
 
 2 authorize the private entity to lease the facilities within a
 
 3 designated area or areas from the public entity, to impose user
 
 4 fees or tolls within the designated area, and to allow a
 
 5 reasonable rate of return on investment, as established through a
 
 6 negotiated agreement between the public entity and the private
 
 7 entity.
 
 8      (c)  The negotiated agreement shall determine a maximum rate
 
 9 of return on investment, based on project characteristics.
 
10      (d)  Agreements may include negotiated "incentive" rates of
 
11 return in excess of the negotiated maximum rate of return on
 
12 investment.  The incentive rates of return shall be designed to
 
13 provide financial benefits to the public entity and the private
 
14 entity, given the attainment of various safety, performance, or
 
15 infrastructure demand management goals.
 
16      (e)  Agreements shall require that, over the term of the
 
17 ownership or lease, the user fees or toll revenues be applied to
 
18 payment of the private entity's capital outlay costs for the
 
19 project, including interest expense, the costs associated with
 
20 operations, collection of user fees or toll revenues, maintenance
 
21 and administration of the facility, reimbursement to the public
 
22 entity for the costs of project review and oversight, technical
 
23 and law enforcement services, establishment of a fund to assure
 

 
Page 10                                                    
                                     H.B. NO.140        
                                                        
                                                        

 
 1 the adequacy of maintenance expenditures, and a reasonable return
 
 2 on investment to the private entity.
 
 3      (f)  The use of any excess toll revenues or user fees may be
 
 4 negotiated between the parties.
 
 5      (g)  After expiration of the lease of a facility to a
 
 6 private entity, the public entity may continue to charge user
 
 7 fees or tolls for the use of the facility, with these revenues to
 
 8 be used for operations and maintenance of the facility, or to be
 
 9 paid to local agencies, or any combination of such uses."
 
10      SECTION 3.  If any provision of this Act, or the application
 
11 thereof to any person or circumstance is held invalid, the
 
12 invalidity does not affect other provisions or applications of
 
13 the Act which can be given effect without the invalid provision
 
14 or application, and to this end the provisions of this Act are
 
15 severable.
 
16      SECTION 4.  This Act shall take effect upon its approval.
 
17 
 
18                         INTRODUCED BY:___________________________
 

 
 
 
 
 
 
 
 
 
 
 
Page 11                                                    
                                     H.B. NO.140        
                                                        
                                                        

 
 1 ___________________________           ___________________________
 
 2 ___________________________           ___________________________
 
 3 ___________________________           ___________________________
 
 4 ___________________________           ___________________________
 
 5 ___________________________           ___________________________
 
 6 ___________________________           ___________________________
 
 7 ___________________________           ___________________________
 
 8 ___________________________           ___________________________
 
 9 ___________________________           ___________________________
 
10 ___________________________           ___________________________
 
11 ___________________________           ___________________________
 
12 ___________________________           ___________________________
 
13 ___________________________           ___________________________
 
14 ___________________________           ___________________________
 
15 ___________________________           ___________________________
 
16 ___________________________           ___________________________
 
17 ___________________________           ___________________________
 
18 ___________________________           ___________________________
 
19 ___________________________           ___________________________