Report Title:

Public Private Partnerships; Transportation



Allows the State to enter into agreements with private entities to build, operate, own, or finance newly constructed transportation facilities including toll highways. (HB139 HD1)



H.B. NO.



H.D. 1
















SECTION 1. The legislature finds that the economic, social, and environmental well-being of the state and the maintenance of a high quality of life for the people of the state require an efficient transportation system.

The ability of the State to provide an efficient transportation system can be enhanced by a public-private sector program that authorizes private entities to undertake all or a portion of the study, planning, design, development, financing, acquisition, installation, construction, improvement, operation, or maintenance of transportation systems and facility projects. This public-private program will benefit both public and private sectors. Public-private initiatives provide a sound economic investment opportunity for the private sector. These initiatives provide the State with increased options to develop the State's infrastructure and can supplement state transportation revenues.

The purpose of this Act is to achieve the following goals through public-private partnerships:

(1) Provide a well-defined mechanism to facilitate the collaboration and creative cost and risk sharing in transportation projects between public and private partners;

(2) Bring innovative thinking from the private sector to bear on transportation needs within the state and access specialized development, financing, design, construction, management, operations, management services, and techniques available in the private sector;

(3) Reduce the public cost of project delivery and services for eligible facilities;

(4) Expedite project delivery;

(5) Encourage private investment in public infrastructure;

(6) Use funding sources that are financially advantageous and in the public interest;

(7) Encourage life-cycle efficiencies in transportation projects;

(8) Provide better use and leverage of public resources and savings to taxpayers, by increasing private investment in public facilities and enhancing capital formation for large projects;

(9) Develop eligible facilities with the cooperation, consultation, and support of affected communities and county jurisdictions;

(10) Solicit, evaluate, negotiate, and administer public-private agreements with the private sector relating to the planning, financing, development, design, construction, upgrading, reconstruction, operation, or maintenance of transportation systems and facilities; and

(11) Obtain assistance in the development of these transportation systems and facilities from federal programs administered by the United States Department of Transportation.

The legislature intends that the powers granted to the state department of transportation and other agencies in this Act are in addition to any other powers authorized under applicable law.

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



   -1 Definitions. Whenever used in this chapter, unless the context otherwise requires:

"Department" means the state department of transportation.

"Eligible facility" means any new facility developed, operated, or held in accordance with this chapter, including any facility used or useful for the safe transport of people or goods via one or more modes of transport, whether involving highways, boats, vessels, intermodal or multimodal systems, or any other mode of transport, as well as facilities, structures, parking, rail yards, or storage facilities, vehicles, rolling stock, or other equipment, items, or property related thereto.

"Private partner" means a person, entity, or organization that is not the federal government, the State, a county, or a unit of government.

"Public-private partnership agreement" means any binding agreement transferring rights for the use or control, in whole or in part, of an eligible facility by the department or other unit of government to a private partner in accordance with this chapter.

"Public-private partnerships in transportation program" or "program" means the program as provided in this chapter.

"Unit of government" means any department or agency of the State, any public corporation established under state law or county ordinance, or any intergovernmental agency or corporation.

   -2 Rules. The department shall adopt, amend, or repeal rules as it determines necessary to effectuate this chapter in accordance with chapter 91.

   -3 Project delivery methods. The department may provide for the development or operation of eligible facilities using a variety of project delivery methods and forms of agreement. These methods may include without limitation:

(1) Predevelopment agreements leading to other implementing agreements;

(2) A design-build agreement;

(3) A design-build-maintain agreement;

(4) A design-build-finance-operate agreement;

(5) A design-build-operate-maintain agreement;

(6) An agreement providing for the private partner to design, build, operate, maintain, manage, or lease an existing, enhanced, upgraded, or new facility; and

(7) Any other project delivery method or agreement or combination of methods or agreements that, in the determination of the department, will serve the public interest.

   -4 Posting of conceptual proposals; public comment; public access to procurement records. (a) Conceptual proposals submitted in accordance with this chapter to a unit of government shall be posted by the responsible unit of government within thirty working days after acceptance of the proposals in accordance with chapter 103D. In addition to the posting requirements, at least one copy of each proposal shall be made available for public inspection. Nothing in this section shall be construed to prohibit the posting of the conceptual proposals by additional means to provide maximum notice to the public of the opportunity to inspect the proposals. Prior to posting or otherwise disclosing the conceptual proposal, the responsible unit of government may redact information from the conceptual proposal to the extent permitted by chapter 92F.

(b) In addition to the posting requirements of subsection (a), for thirty days prior to entering into an interim or comprehensive agreement, the responsible unit of government shall provide an opportunity for public comment on the proposals. The public comment period required by this subsection may include a public hearing in the sole discretion of the responsible unit of government.

(c) Once an interim agreement or a comprehensive agreement has been entered into, the responsible unit of government shall make procurement records available for public inspection, upon request. For the purposes of this subsection, procurement records shall not be interpreted to include trade secrets or confidential information which may be withheld from public disclosure under chapter 92F.

(d) This section shall apply to accepted proposals regardless of whether the negotiationsx will result in an interim or a comprehensive agreement.

(e) A responsible unit of government and any independent review panel appointed to review information and advise the responsible unit of government may hold a meeting closed to the public for the purpose of considering records exempt from disclosure; provided that the meetings are held in accordance with the procedural requirements of sections 92-4 and 92-5.

   -5 Public-private partnership agreements. (a) In any public-private partnership agreement for any eligible facility under this chapter, the department may:

(1) Authorize the private partner to collect user fees, tolls, fares, or similar charges, including without limitation provisions:

(A) Specifying the technology to be used in the facility;

(B) Establishing circumstances under which the department may receive a share of revenues from such charges; and

(C) Governing enforcement of tolls, including use of cameras or other mechanisms to ensure that users pay tolls that are due, and allowing the private partner access to relevant state and county databases to the extent necessary to collect and enforce tolls;

(2) Allow for payments to be made by the State to the private partner, including but not limited to availability payments or performance-based payments;

(3) Allow the department to accept payments of money and share revenues with the private partner;

(4) Address the method of sharing risk management and insurance for the project;

(5) Specify the method of sharing the costs of development of the project;

(6) Allocate financial responsibility for cost overruns;

(7) Establish the damages to be assessed for nonperformance;

(8) Establish performance criteria, incentives, or both;

(9) Address the acquisition of rights-of-way and other property interests that may be required, including provisions addressing the exercise of eminent domain;

(10) Establish recordkeeping, accounting, and auditing standards to be used for the project;

(11) For a project that reverts to public ownership, address responsibility for reconstruction or renovations required for a facility to meet all applicable government standards upon reversion of the facility to public ownership;

(12) Provide for patrolling and law enforcement on public facilities;

(13) Identify any department specifications that must be satisfied, including allowing the private partner to request and receive authorization to deviate from those specifications on making a showing of need satisfactory to the department;

(14) Require a private partner to provide performance and payment bonds, parent company guarantees, letters of credit, and other acceptable forms of security, the penal sum or amount of which may be less than one hundred per cent of the value of the contract involved based upon the department's determination, made on a facility-by-facility basis, of what is required to adequately protect the State;

(15) Authorize the private partner in a partnership agreement under this chapter to collect user fees, tolls, fares, or similar charges to cover its costs and provide for a reasonable rate of return on the private partner's investment, including without limitation the following provisions:

(A) That the charges may be collected directly by the private partner or by a third party engaged for that purpose;

(B) A formula for the adjustment of user fees, tolls, fares, or similar charges during the term of the agreement;

(C) For an agreement that does not include such a formula, provisions regulating the private partner's return on investment; or

(D) A list of various traffic management strategies, including without limitation:

(i) General purpose toll lanes;

(ii) High occupancy vehicle lanes where single or low occupancy vehicles may "buy-in" to use higher occupancy vehicle lanes by paying a toll;

(iii) Lanes or facilities where the tolls may vary during the course of the day or week or according to levels of congestion anticipated or experienced; or

(iv) Any combinations of, or variations on, the foregoing, or other strategies, that the department may determine appropriate on a facility-by-facility basis;


(16) Specify remedies available and dispute resolution procedures, including but not limited to the right of the private partner to institute legal proceedings to obtain an enforceable judgment or award against the department in the event of a default by the department, and procedures for use of dispute review boards, mediation, facilitated negotiation, arbitration, and other alternative dispute resolution procedures.

(b) The department may enter into agreements with any private partner that includes provisions as described in subsection (a) notwithstanding any other provision of state law or rule or county ordinance or rule.

   -6 Fines; toll evaders. The department shall adopt rules in accordance with chapter 91 to establish fines for any motorist who violates this chapter by evading the payment of an appropriate levied toll on any toll highway built, operated, owned, or financed under this chapter.

   -7 Police powers; violations of law. (a) All police officers and other law enforcement officers having police powers of the State and of each affected county shall have the same powers and jurisdiction within the limits of the eligible facility that they have in their respective areas of jurisdiction, and these officers shall have access to the eligible facility at any time for the purpose of exercising their powers and jurisdiction. This authority shall not extend to the private offices, buildings, garages, and other improvements of the private partner to any greater degree than the police power applies to any other private buildings and improvements.

(b) To the extent the transportation facility is a road, bridge, tunnel, overpass, or similar transportation facility for motor vehicles, the traffic and motor vehicle laws of the State or, if applicable, any county jurisdiction, shall be the same as those applying to conduct on similar transportation facilities in the state or a county. Punishment for offenses shall be as prescribed by law for conduct occurring on similar transportation facilities in the State or a county.

   -8 Funding and financing. (a) The department, in connection with providing for the development or operation of an eligible facility, may allow funding from any lawful source, including without limitation:

(1) The proceeds of grant anticipation revenue bonds authorized by 23 United States Code Section 122 or any other applicable federal or state law;

(2) Grants, loans, loan guarantees, lines of credit, revolving lines of credit, or other arrangements available under the Transportation Infrastructure Finance and Innovation Act under 23 United States Code Section 181 or any other federal or state law;

(3) Federal, state, or county revenues;

(4) User fees, tolls, fares, charges, lease proceeds, rents, availability payments, gross or net receipts from sales, proceeds from the sale of development rights, franchise fees, permit fees, or any other lawful form of consideration;

(5) Private activity bonds as described by 26 United States Code Section 142(a)(15) and other forms of private capital; and

(6) Any other forms of public and private capital as may be available.

(b) As security for the payment of financing described in this section, the revenues from the project may be pledged, but no such pledge of revenues shall constitute in any manner or to any extent a general obligation of the State or any county. Any financing may be structured on a senior, parity, or subordinate basis to any other financing.

(c) The department, and any other unit of government authorized by the department, may issue toll revenue bonds to provide funds for any project under this chapter.

(d) The department may accept from the United States or any of its agencies any funds that are available to the State or to any other unit of government for carrying out the purposes of this chapter, whether the funds are made available by grant, loan, or other financing arrangement. The department may enter into any agreements and other arrangements with the United States or any of its agencies that may be necessary, proper, and convenient for carrying out the purposes of this chapter.

(e) The department may accept from any source any grant, donation, gift, or other form of conveyance of land, money, other real or personal property, or other valuable thing made to the State, the department, or another unit of government for carrying out the purposes of this chapter.

(f) Any eligible facility may be funded in whole or in part by contribution of any funds or property made by any private partner or public-sector partner that is a party to any agreement entered into under this chapter.

(g) Federal, state, and county funds may be combined with any private-sector funds for any project purposes, notwithstanding any other provision of state law or rule or county ordinance or rule.

   -9 Confidentiality and public disclosure. A proposer shall identify those portions of a proposal or other submission that the proposer considers to be trade secrets or confidential commercial, financial, or proprietary information. The identified information shall be withheld from public disclosure to the extent permitted by chapter 92F.

   -10 Federal laws. If no federal funds are used on an eligible facility, the laws of the State, including this chapter, shall govern. Notwithstanding any provisions of this chapter, if federal funds are used on an eligible facility and applicable federal statutes or regulations conflict with this chapter or require provisions or procedures inconsistent with this chapter, the applicable federal statutes or regulations shall govern."

SECTION 3. This Act shall take effect on July 1, 2009.