STAND. COM. REP. 1097

Honolulu, Hawaii

, 2003

RE: S.B. No. 1477

S.D. 2

H.D. 2

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Judiciary, to which was referred S.B. No. 1477, S.D. 2, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO MUNICIPAL LEASES,"

begs leave to report as follows:

The purpose of this bill as received is to enable county governments to enter into lease and leaseback arrangements for wastewater, waterworks, and sewer and disposal systems as a mechanism to raise funds from these assets and to invest the proceeds from the lease to meet leaseback payment obligations. The bill also would exempt county government and the private investor who purchased the lease from all state and local taxes relating to the transaction.

The City and County of Honolulu, ALLCO Finance, and the County of Maui testified in support of the bill. The County of Hawaii testified in support of the bill if an amendment is made. The Hawaii State Department of Health offered comments.

Your Committee finds that the bill proposes an exciting opportunity for county governments to raise cash through the long term lease of one type of asset. However, the Committee finds that there are many questions about the process involved, the implications on the loss of state and federal tax revenue by exempting this transaction from taxes, and whether a county could lose control over the wastewater facility. The Committee believes that further discussion is necessary on this bill and urges the Finance Committee to review the tax exemption issues and the proposed mechanism to bring needed revenues to county governments. Accordingly, your Committee has amended the bill to encourage further discussion by eliminating the proposed section 4 "Exemption from Taxation".

As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1477, S.D. 2, H.D. 1, as amended herein, and recommends that it be referred to the Committee on Finance in the form attached hereto as S.B. No. 1477, S.D. 2, H.D. 2.

 

Respectfully submitted on behalf of the members of the Committee on Judiciary,

 

____________________________

ERIC G. HAMAKAWA, Chair