Report Title:

University Projects and Purposes

Description:

Grants flexibility to the Board of Regents in the financing and administration of capital UH undertakings within the jurisdiction of the UH including pledging, committing, and designating legislative appropriations from revolving or special funds of the University. And authorizes the Board to issue bonds for a "university purpose".

THE SENATE

S.B. NO.

1409

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO UNIVERSITY PROJECTS AND PURPOSES.

 

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

SECTION 1. The Hawaii Revised Statutes are amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

UNIVERSITY PROJECTS AND PURPOSES

  -1 Definitions and interpretations. Whenever used in this chapter:

"Board" means the board of regents of the university, which is hereby declared to be a body corporate and politic.

"Construction" includes acquisition, purchase, planning, construction, reconstruction, remodeling, renovation, improvement, betterment, and extension; "construct" includes acquire, purchase, plan, construct, reconstruct, remodel, renovate, improve, better, and extend.

"Cost of construction" includes all costs and estimated costs related to construction, and, without limiting the generality of the foregoing, includes: all costs and estimated costs of the preparation and issuance of revenue bonds and the obtaining of a loan; costs of land acquisition; all costs and estimated costs of construction of a university project, including engineering, architectural, supervisory, inspection, fiscal, administrative, and clerical fees, costs, and expenses; interest which it is estimated will accrue during the construction period and for six months thereafter on money obtained by loan or through the issuance of revenue bonds, or both; amounts necessary to establish or increase reserves; costs of utilities, equipment, fixtures, and apparatus necessary or convenient for the use and occupancy of the university project; necessary travel expenses; and, if so determined by the board, the initial furnishings of the university project.

"Cost of maintenance" includes all costs and estimated costs of the maintenance of a university project, university system, network, or any combination thereof, and, without limiting the foregoing, includes all salaries, wages, and fees of officers, employees, and contractors of the board engaged in the maintenance of a university project, university system, network, or any combination thereof, the cost of all supplies and equipment, and all operational and administrative expenses.

"Legislative appropriation" means moneys appropriated or allocated by the legislature of the State to the board, the university, any university project, any university system, any network, or any combination thereof, from any revolving or special fund of the university that consists of rates, rentals and charges, that is permitted to be expended for the costs of construction, costs of maintenance, debt service on revenue bonds, or any combination thereof, and that is pledged, committed, and designated by the board as revenue of the university; provided that nothing in this definition shall be deemed to permit moneys from any revolving or special fund of the university to be expended for a purpose not permitted by the terms governing such revolving or special fund.

"Maintenance" includes repairs, upkeep, replacement, renewals, maintenance, operation, and administration; "maintain" includes repair, keep up, replace, renew, maintain, operate, and administer.

"Network" means any university system or systems or university purpose or purposes which, at the election of the board, are consolidated into a single network. A network may include various university projects and university purposes on any one or more of the areas under the jurisdiction of the board and may include university projects and university purposes of any one or more of the educational institutions under the control of or governed by the board, including the university.

"Revenue bonds" mean revenue bonds, interim certificates, notes, debentures, or other evidence of indebtedness of the board authorized by or issued under this chapter.

"Revenue of the university" means all income, receipts, revenue, and moneys of whatever nature received by the university, or which it is entitled to receive, from its ownership or operation and management of the university, including any legislative appropriation to the extent pledged, committed, and designated by the board as revenue of the university, other than gifts the terms of which preclude their being used for payment of the cost of construction, cost of maintenance, or both, of a university project, a university system, or a network.

"University" means and includes the University of Hawaii, each community college established and governed by the board pursuant to chapter 305, and any and every other educational institution now or hereafter under the control of or governed by the board.

"University athletic unit" means athletic facilities of every nature devoted either exclusively to use by the university, its students, faculties, guests, employees, and their families, including reciprocal beneficiaries of any such persons, or both to university and non-university uses, for the enjoyment or utilization of, or for the privilege of observance of athletic contests or exhibitions conducted in or by means of, which facilities a fee is imposed or a charge made. A university athletic unit includes, but is not limited to, gymnasium, field house, stadium, playing field, baseball diamond, courts suitable for tennis, volleyball, and basketball, and swimming and diving pools.

"University dining unit" means a structure or facility suitable for the feeding and boarding of students enrolled in the university, members of the faculties of the university, guests, employees of the university, and members of the families, including reciprocal beneficiaries of any such persons, for the use and services of which a fee is imposed or charge made. A university dining unit may be a separate structure or structures or included in another university project.

"University health unit" means a facility for the treatment, diagnosing, or prevention of illness of students enrolled in the university, members of the faculties of the university, persons temporarily visiting the university, employees of the university, and members of the families, including reciprocal beneficiaries of any such persons, for the use and services of which a fee is imposed or charge made. A university health center includes, but is not limited to, health centers, infirmaries, and clinics, and may be a separate structure or structures or included in another university project.

"University housing unit" means a structure or structures suitable for the housing of and use and occupancy as a dwelling by students enrolled in the university, members of the faculties of the university, persons temporarily visiting the university at the invitation or request of the board, employees of the university, and members of the families, including reciprocal beneficiaries of any such persons, for the use and occupancy of which a fee or rent is charged. A university housing unit includes, but is not limited to, dormitories, apartments, and other multiple unit buildings, houses, and other single unit buildings.

"University parking unit" means a facility for the parking or storage, or both, of vehicles owned or used by students enrolled in the university, members of the faculties of the university, persons temporarily visiting the university, employees of the university, and members of the families, including reciprocal beneficiaries of any such person, for the use, services, or occupancy of which a fee is imposed or charge made. A university parking unit includes, but is not limited to, parking spaces on streets, alleys, drives, and other roadways under the jurisdiction of the board, paved or unpaved surface areas or lots, and subsurface, surface, or above surface structure or structures, and may be a separate structure or structures or included in another university project.

"University project" means any undertaking or improvement, including, except as otherwise provided in this chapter, any university purpose designated by the board as a university project constructed, maintained, or both, by the board, in furtherance of the purposes of the university. A university project shall include, but not be limited to, all land, fixtures, appurtenances, improvements, utilities, equipment, and furnishings necessary or convenient for the use and occupancy of a university project for the purposes for which it was constructed or is used.

"University purpose" means any action, undertaking, or improvement by the board reasonably related to the development and promotion of the university as an institution of higher learning or an action, improvement, or undertaking related thereto.

"University student center" means a structure or structures suitable for student activities or endeavors, such as, but not limited to, meetings, organizations, publications, and recreation, for the use and services of which a fee is imposed or a charge made. A university student center includes, but is not limited to, student unions, bookstores, and snack bars, and may be a separate structure or structures or included in another university project.

"University system" means two or more university projects, other than university purposes, operated, and maintained jointly as a system.

  -2 Powers of the board. In addition to the powers that it now possesses, and notwithstanding any law to the contrary, the board may:

(1) Designate any undertaking, improvement, university purpose, or facility, now or hereafter existing on any one or more of the areas of any one or more of the educational institutions under the control of the board, a university project.

(2) Construct and maintain a university project or projects;

(3) Combine two or more university projects, other than university purpose or purposes, now or hereafter existing on any one or more of the areas of any one or more of the educational institutions under the control of or governed by the board, into a university system or systems, and to maintain such system or systems;

(4) Combine university projects, including university purpose or purposes designated by the board as a university project, and university system or systems, now or hereafter existing on any one or more of the areas of any one or more of the educational institutions under the control of or governed by the board, into a network or networks, and to maintain such network or networks;

(5) Prescribe and collect rents, fees, and charges for the use of or services furnished by any university project and the facilities thereof, or pledge, commit, and designate any legislative appropriation to any university project and the facilities thereof, or a combination thereof, which, in aggregate, will produce revenue of the university at least sufficient to comply with section -11 of this chapter;

(6) With the approval of the governor, issue revenue bonds, to finance in whole or in part the cost of construction, or maintenance, or both, of any university project;

(7) Pledge to the punctual payment of such revenue bonds and interest thereon, all or any part of the revenue of the university, including all or any legislative appropriation, in an amount sufficient to pay such revenue bonds and interest as the same become due and to create and maintain reasonable reserves therefor;

(8) Advance such moneys of the university, not otherwise required, and do any and all other lawful acts as may be necessary, convenient, or desirable, for carrying into execution and administering this chapter.

  -3 Designation and authorization of university projects, university systems, and networks, and authorization of revenue bonds. The designation and authorization of construction, maintenance, or both, of a university project or projects, university system or systems, or network or networks, and the authorization for issuance of revenue bonds under this chapter shall be by resolution or resolutions of the board. Any such resolution may be adopted at the same meeting at which it is introduced by a majority of all the members of the board then in office and shall take effect immediately upon adoption.

  -4 Revenue bonds; details, sale, legal investment. Revenue bonds shall be issued in the name of the board; may bear interest at such rate or rates payable at such time or times; may be issued in one or more series; may be in such denomination or denominations; may bear such date or dates; may mature at such time or times not exceeding fifty years from their respective dates; may be payable in such medium of payment and at such place or places within or without the State; may carry such registration privileges; may be subject to such terms and conditions of redemption or to tenders for purchase or to purchase prior to the stated maturity thereof at the option of the board or the holder, or both; may contain such terms, covenants, and conditions; and may be in such form and printed in such manner, including typewritten; as the resolution authorizing the issuance of the revenue bonds or subsequent resolutions may provide.

The board may make such arrangements as may be necessary or proper for the sale of each issue of revenue bonds or part thereof as are issued pursuant to this chapter, including, without limitation, arranging for the preparation and printing of the revenue bonds, the official statement, and any other documents or instruments deemed required for the issuance and sale of revenue bonds and retaining such financial, accounting, and legal consultants, all upon such terms and conditions as the board deems advisable and in the best interest of the State and the university. The board may offer the revenue bonds at competitive sale or may negotiate the sale of the revenue bonds to any person or group of persons, to the United States of America, or any board, agency, instrumentality, or corporation thereof, to the employees retirement system of the State, to any political subdivision of the State, or to any board, agency, instrumentality, public corporation, or other governmental organization of the State or of any political subdivision thereof.

The sale of the revenue bonds by the board by negotiation shall be at such price or prices, and upon such terms and conditions, and the revenue bonds shall bear interest at such rate or rates or such varying rates determined from time to time in the manner as the board shall approve.

The sale of the revenue bonds by the board at competitive sale shall be at such price or prices and upon such terms and conditions, and the revenue bonds shall bear interest at such rate or rates or such varying rates determined from time to time in the manner as specified by the successful bidder. The revenue bonds shall be sold in the manner provided in section 39-55.

The board may delegate the responsibility for the sale and the fixing of the terms and details of revenue bonds and such other determinations or actions as may be provided by resolution of the board, to the chairman, the president, or another designated officer.

All public officers and bodies of the State, all political subdivisions, all insurance companies and associations, all banks, savings banks, and savings institutions, including building or savings and loan associations, all credit unions, all trust companies, all personal representatives, guardians, trustees, and all other persons and fiduciaries in the State who are regulated by law as to the character of their investment, may legally invest funds within their control and available for investment in revenue bonds issued under this chapter. The purpose of this paragraph is to authorize any person, firm, corporation, association, political subdivision, body, or officer, public or private, to use any funds owned or controlled by them, including (without prejudice to the generality of the foregoing), sinking, insurance, investment, retirement, compensation, pension, trust funds, and funds held on deposit, for the purchase of any revenue bonds issued under this chapter.

  -5 Support facility for variable rate revenue bonds. If revenue bonds issued pursuant to this chapter are issued bearing interest at a rate or rates that vary from time to time and with a right of holders to tender the revenue bonds for purchase, the board may contract for such support facility or facilities and remarketing arrangements as are required to market the revenue bonds to the greatest advantage of the board and the university upon such terms and conditions as the board deems necessary and proper.

The board may enter into contracts or agreements with the entity or entities providing a support facility; provided that any contract or agreement shall provide, in essence, that any amount due and owing by the board under the contract or agreement on an annual basis shall be payable from the revenue of the university and any obligation issued or arising pursuant to the terms of the contract or agreement in the form of revenue bonds, notes, or other evidences of indebtedness shall only arise at such time as either:

(1) Moneys or securities have been irrevocably set aside for the full payment of a like principal amount of revenue bonds issued pursuant to this chapter; or

(2) A like principal amount of the issue or series of revenue bonds to which the support facility relates are held in escrow by the entity or entities providing the support facility.

  -6 CUSIP numbers. The board in its discretion may provide that CUSIP identification numbers shall be imprinted on revenue bonds issued under this chapter. In the event such numbers are imprinted on any such revenue bonds (1) no such number shall constitute a part of the contract evidenced by the particular revenue bond upon which it is imprinted and (2) no liability shall attach to the board or any officer or agent thereof or the State or any officer thereof, including any fiscal agent, paying agent, or registrar for such revenue bonds, by reason of such numbers or any use made thereof, including any use thereof made by the board, the State, any such officer, or any such agent, or by reason of any inaccuracy, error, or omission with respect thereto or in such use. The board in its discretion may require that all cost of obtaining and imprinting such numbers shall be paid by the purchaser of such revenue bonds.

  -7 Covenants in resolution authorizing revenue bonds. Any resolution or resolutions authorizing the issuance of revenue bonds under this chapter may contain covenants as to:

(1) The purpose or purposes to which the proceeds of the sale of the revenue bonds may be applied; the use and disposition of such proceeds; the investment thereof pending such use and disposition; and the use and disposition of the income from such investment;

(2) The use and disposition of the revenue of the university pledged to the payment of such revenue bonds, including the creation and maintenance of reserves; the investment of such revenues and of the moneys in such reserves; and the use and disposition of the income from such investments;

(3) The minimum amount of revenues of the university to be produced by the university project or projects, university system, or systems or network or networks, or any combination thereof, over and above the amount required to be produced by section -11;

(4) The use and disposition of the proceeds of the sale of any university project or projects, university system or systems, or network or networks, or any part or parts thereof;

(5) The construction and maintenance of any university project or projects, university system or systems, or network or networks, for the construction or maintenance of which revenue bonds are issued or the university system or systems or network or networks in which such latter university project or projects are to be included;

(6) The issuance of other or additional revenue bonds and the revenue from which such additional revenue bonds shall be payable;

(7) The maintenance of the university project or projects, university system or systems, or network or networks, or any combination thereof, including the creation by the board of such supervisory positions, which shall not be subject to chapter 76, as are necessary to facilitate the issuance of revenue bonds by ensuring the adequacy of revenues;

(8) The insurance to be carried on university project or projects, university system or systems, or network or networks, or any combination thereof, and the use and disposition of insurance moneys;

(9) Books of account and inspection and audit thereof;

(10) A procedure by which the terms and conditions of the resolution may be subsequently amended or modified with the consent of the board, the vote or written assent of such holders of revenue bonds or any proportion of such holders, or any trustee thereof; and

(11) The terms and conditions upon which the holders of revenue bonds, or any proportion of the holders, or any trustee thereof, shall be entitled to the appointment of a receiver by any court of competent jurisdiction, which court shall have jurisdiction in such proceedings, and which receiver may enter and take possession of the university project or projects, university system or systems, or network or networks, maintain them, prescribe rents, fees, and charges, and collect, receive, and apply all revenue thereafter arising therefrom in the same manner as the board itself might do, but the receiver shall have no power, nor be granted any power, to utilize, or permit the utilization of, any university project or projects, university system or systems, or network or networks other than in a manner consistent with and in furtherance of the purposes of the university.

This chapter and any such resolution or resolutions shall be a contract with the holders of revenue bonds issued under this chapter, and the duties of the board and any such resolution or resolutions shall be enforceable by any bondholder by mandamus or other appropriate suit, action, or proceeding in any court of competent jurisdiction.

  -8 Execution and validity of revenue bonds. Revenue bonds issued under this chapter shall bear the manual or facsimile of the signatures of the chairperson and secretary of the board, and shall be sealed with the seal of the board or in lieu thereof shall bear a facsimile of such seal. If the board shall have designated a registrar other than itself for the revenue bonds, the resolution authorizing the revenue bonds may provide that none of the revenue bonds shall be valid or obligatory for any purpose unless authenticated by the registrar. If the resolution so provides, then all signatures of the board upon the revenue bonds may be facsimiles of the signatures, and the revenue bonds shall be valid and obligatory only if authenticated by the manual signature of an authorized officer or signatory of the registrar. Revenue bonds bearing the signature of officers in office at the date of the signing thereof shall be valid obligations, notwithstanding that before the delivery thereof and payment therefor any or all of the persons whose signatures appear thereon shall have ceased to be officers. The validity of the bonds shall not be dependent on nor affected by the validity or regularity of any proceedings relating to the construction or maintenance of the university project or projects, university system or systems, or network or networks for which the revenue bonds were issued. The resolution authorizing the issuance of revenue bonds may provide that the bonds shall contain a recital that they are issued pursuant to this chapter, which recital shall be conclusive evidence of their validity and of the regularity of their issuance.

  -9 Pledge of revenue of the university. The resolution or resolutions authorizing the issuance of revenue bonds may pledge to the payment thereof all or any part of the revenue of the university, and the pledge shall constitute a lien on such revenue of the university to the extent and in the manner provided in the resolution or resolutions prior and paramount to any claim or other obligation of any nature against such revenue of the university so pledged subsequently arising or subsequently incurred. The board may provide in the resolution or resolutions that all revenue bonds of the same issue shall be equally and ratably secured without priority by reason of number, date, or maturity of the bonds, date of sale, execution, or delivery thereof. Any pledge of revenue of the university contained in any resolution or resolutions adopted under this chapter shall be valid from and after the adoption of the resolution or resolutions without physical delivery of the revenue of the university therein pledged or the necessity of any further action by the State or the board, or any officer or agent of either the State or the board.

  -10 Payment and security of revenue bonds; revenue bonds not a debt of the State. Revenue bonds issued under this chapter shall be payable from and secured by the revenue of the university pledged to the payment thereof, and such revenue of the university shall be applied to such payment in accordance with the provisions of this chapter and the resolution or resolutions authorizing the issuance of the revenue bonds. The university shall constitute a public undertaking, improvement, or system, and any and all legislative appropriation shall constitute revenue of the university under the Constitution and laws of the State. No holder or holders of any revenue bonds issued under this chapter shall ever have the right to compel any exercise of the taxing power of the State or the making of any legislative appropriation to pay such revenue bonds, or interest thereon. Each revenue bond shall recite in substance that the revenue bond, including interest thereon, is payable from and secured by the revenue of the university pledged to the payment thereof, and that the revenue bond does not constitute a general or moral obligation or indebtedness of the State within the meaning of any limitation of law.

  -11 Imposition of rates, rents, fees, and charges; pledge, designation and commitment of legislative appropriation. The board shall (i) impose and collect rates, rents, fees, and charges for the use or enjoyment and services of the facilities of each university project, and shall revise such rates, rents, fees, and charges from time to time whenever necessary, or (ii) each year, pledge, designate, and commit any legislative appropriation for each university project, or (iii) any combination thereof, so that, in the aggregate, the revenue of the university with respect to all such university projects, university systems, or networks shall be such as will produce revenue of the university at least sufficient:

(1) To pay the cost of maintenance of university project or projects, university system or systems, or network or networks, or any combination thereof, including reserves therefor;

(2) To pay when due all revenue bonds and interest thereon, for the payment of which all or any part of the revenue of the university is or has been pledged, charged, or otherwise encumbered, including reserves therefor;

(3) To reimburse the general fund of the State for principal and interest on general obligation bonds issued for university project or projects, university system or systems, or network or networks, or any combination thereof, or to refund of such general obligation bonds, to the extent required by law; and

(4) To carry out all covenants and provisions of the resolution or resolutions authorizing the issuance of revenue bonds.

Nothing in this chapter shall preclude the making of appropriations to the university or board, including any legislative appropriation, or the acceptance of gifts by the board or the use of funds derived from the sale of stocks, bonds, or other assets in the possession of the board to pay all or part of the costs of construction, of maintenance, or both, of any or all university projects, university systems, or network.

  -12 University revenue-undertakings fund. There is hereby established in the treasury of the State a special fund to be known as the university revenue-undertakings fund into which all revenue of the university, including any legislative appropriation, received from, or related to, university projects, university systems, or networks, constructed, maintained, or both, by the board under this chapter shall be deposited. At the direction of the board, there may be established such accounts in the university revenue-undertakings fund as required by the resolution or resolutions authorizing revenue bonds. In the event that revenue bonds are issued under this chapter payable from the revenues of a university parking unit or the revenues of a university system that includes a university parking unit, the board in the resolution or resolutions authorizing such revenue bonds may direct that all or any part of the moneys required by sections 308-2 and 308-3 to be paid into the university parking revolving fund created by said section 308-2 shall be deposited in the university revenue-undertakings fund in lieu of being deposited in the university parking revolving fund, and thereafter all such moneys or such part thereof as the board has directed shall be deposited in the university revenue-undertakings fund in lieu of being deposited in the university parking revolving fund. All moneys in the university revenue-undertakings fund shall be applied in accordance with the provisions of the resolution or resolutions of the board authorizing the issuance of revenue bonds under this chapter:

(1) To provide for all costs of construction, operation, repair, and maintenance of university project or projects, university system or systems, or network or networks, or any combination thereof, including reserves therefor;

(2) To pay when due all revenue bonds and interest thereon, for the payment of which all or any part of the revenue of the university is or has been pledged, charged, or otherwise encumbered, including reserves therefor;

(3) To reimburse the university for all moneys advanced to pay the expenses incurred in making the preparation for the initial issuance of revenue bonds under this chapter;

(4) To reimburse the general fund of the State for principal and interest on general obligation bonds issued for a university project or projects, university system or systems, or network or networks, or any combination thereof, or to refund any of such general obligation bonds, to the extent required by law; and

(5) To provide a reserve for betterments and improvements to and renewals and replacements of, university projects, university systems, or networks.

If adequate provision has been made for all the foregoing purposes, and if permitted by law and the covenants in the resolution or resolutions authorizing the issuance of revenue bonds under this chapter, any moneys remaining in the university revenue-undertakings fund at the end of any fiscal year may be expended by the board in subsequent years in furtherance of any or all of the purposes of the university.

  -13 Revenue bond anticipation notes. In anticipation of the issuance under this chapter of revenue bonds and of the receipt of the proceeds of sale of such revenue bonds, the board shall have power, with the approval of the governor, to issue and sell bond anticipation notes for the purposes for which such revenue bonds have been authorized, the maximum principal amount of which notes shall not exceed the authorized principal amount of such revenue bonds. The notes shall be payable from and secured by the proceeds of the sale of the bonds in anticipation of which the notes are issued and the revenues of the university from which would be payable and by which would be secured such revenue bonds; provided that to the extent the principal of the notes is paid from moneys other than the proceeds of sale of such revenue bonds, the maximum amount of revenue bonds in anticipation of which the notes are issued that has been authorized shall be reduced by the amount of such notes paid in such manner. The issuance of such notes and the details thereof shall be governed by the provisions of this chapter with respect to revenue bonds insofar as the same may be applicable; provided that (1) each note, together with all renewals and extensions thereof, or refundings thereof by other notes issued under this section, shall mature within five years from the date of the original note, and (2) the notes may be sold at public or private sale, as the board may determine.

  -14 University project, university system, networks, and revenue bonds exempt from taxation. The property and revenue of any university project, university system, or network shall be exempt from all taxation and assessments by the State or any county or other political subdivision thereof. Revenue bonds issued under this chapter and all income therefrom shall be exempt from all taxation by the State or any county or other political subdivision thereof, except inheritance, transfer, and estate taxes.

  -15 Powers herein additional to other powers. The powers conferred by this chapter shall be in addition and supplemental to the powers conferred by any other law concerning any university project, university system, network, or any combination thereof, or the issuance of revenue bonds. Revenue bonds may be issued pursuant to this chapter for those purposes notwithstanding that any other law may provide for the acquisition, purchase, construction, reconstruction, improvement, betterment, or extension of a like undertaking or the establishment, maintenance, or extension of a like university project, university system, or network, or any combination thereof, or the issuance of revenue bonds, without regard to the requirements, restrictions, limitations, or other provisions contained in any other law. Except as expressly provided in any other law, insofar as the provisions of this chapter are inconsistent with the provisions of any other laws, the provisions of this chapter shall be controlling.

  -16 Funding and refunding revenue bonds; authorization and purpose. The board may, with the approval of the governor, provide for the issuance of revenue bonds (herein referred to as refunding bonds) for the purpose of refunding, redeeming, or retiring at or at any time before maturity or at any time before the first date upon which the outstanding revenue bonds to be refunded may be called for redemption, any revenue bonds issued under this chapter, including any revenue bonds that the holders may consent to be paid or refunded even though the revenue bonds are not matured or are not callable or redeemable, and for the purpose of funding indebtedness not evidenced by revenue bonds but that was incurred for purposes for which revenue bonds may be issued pursuant to this chapter. The rate or rates of interest borne by the refunding bonds shall not be affected or limited by the rate or rates of interest borne by the revenue bonds to be refunded or the indebtedness to be funded. All provisions of this chapter applicable to the issuance of revenue bonds shall be complied with in the issuance of refunding bonds. Refunding bonds shall be sold as provided in section -4, or the board may, in its discretion, provide for the exchange of refunding bonds for a like principal amount of outstanding revenue bonds for the refunding of which the issuance of such refunding bonds has been authorized, whether or not the interest rate on the refunding bonds is higher than the interest rate on the bonds refunded thereby.

Refunding bonds may be issued in a principal amount sufficient to provide funds for the payment of all revenue bonds or indebtedness to be funded or refunded thereby, and for the payment of all expenses paid or incurred in connection with the calling, redeeming, retiring, or paying of such indebtedness or outstanding revenue bonds, and the issuance of such refunding bonds. The expenses may include the amount necessary for the payment of interest upon the indebtedness to be funded or the revenue bonds to be refunded to the maturity or redemption date thereof, the amount necessary for the payment of interest upon the refunding bonds from the date of delivery thereof to the date upon which the principal of the outstanding revenue bonds to be refunded will be paid whether at maturity or pursuant to a call for redemption thereof, or pursuant to agreement with the holders thereof, plus in any case the amount of the premium, if any, required to be paid in order to call or retire the revenue bonds to be required.

  -17 Fiscal agents. The director of finance of the State, when requested by the board, shall render full and complete assistance to the board in the preparation and sale of revenue bonds issued pursuant to this chapter. The director of finance shall be the fiscal agent of the board for the payment of all principal and interest, and for the transfer, of revenue bonds. The provisions of section 36-3 and 39-12, relating to the appointment by the director of finance of other fiscal agents, paying agents, transfer agents, and registrars and to the status of funds held by these fiscal agents, to the extent that they may appropriately be applied, shall be deemed incorporated in this chapter. The director of finance shall cause to be set up in the treasury of the State suitable accounts for the deposit of all revenues of university projects, university systems, or networks and for the payment of all revenue bonds and the interest thereon, and for all other payments provided or required by this chapter, or any resolution or resolutions of the board and for the holding of all reserves created under this chapter or any resolution or resolutions of the board.

  -18 Validation of proceedings. All proceedings taken with respect to the contracting of revenue bonded indebtedness and the issuance, sale, execution, and delivery of revenue bonds by the board are hereby validated, ratified, approved, and confirmed, notwithstanding any defects or irregularities in any proceedings or in the issuance, execution, sale, or delivery, and the revenue bonds so issued or to be issued are and shall be valid obligations of the board.

  -19 Limitation of authority. Notwithstanding any other provision to the contrary, nothing in this chapter shall be construed to authorize the board to incur any indebtedness contrary to the Constitution of the State or to incur any indebtedness that would be required to be included in the calculation of the total indebtedness of the State."

SECTION 2. Chapter 306, Hawaii Revised Statutes, is hereby repealed.

SECTION 3. This Act shall take effect on July 1, 2003.

INTRODUCED BY:

_____________________________

BY REQUEST