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; authorizes use of and establishes criteria for
project labor agreements; creates a construction industry branch
under DBEDT; defines "state contractor", "state subcontractor",
and "state resident"; increases bid preference.  (SD2) 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        140
HOUSE OF REPRESENTATIVES                H.B. NO.           S.D. 2
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                              PART I
 
 2      SECTION 1.  The legislature finds and declares that:
 
 3      (1)  It is essential for the economic, social, and
 
 4           environmental well-being of the State and the
 
 5           maintenance of a high quality of life that the people
 
 6           of the State have access to efficient infrastructure
 
 7           facilities;
 
 8      (2)  The ability of the State and local governments to
 
 9           provide efficient infrastructure facilities will be
 
10           enhanced by a public-private program enabling private
 
11           entities to undertake all or a portion of the study,
 
12           planning, design, development, financing, acquisition,
 
13           installation, construction, or improvement, operation,
 
14           and maintenance of infrastructure facilities;
 
15      (3)  A public-private infrastructure program will provide
 
16           benefits to both the State and private entities.
 
17           Public-private infrastructure facilities provide a
 
18           sound economic investment opportunity for the private
 
19           sector.  Such a program will provide the State and
 

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

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

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

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1        -2 Project selection.(a)  A public entity may
 
 2 solicit proposals from, and negotiate and enter into agreements
 
 3 with, private entities to undertake as appropriate, together with
 
 4 the public entity and other public entities, all or a portion of
 
 5 the study, planning, design, construction, operation, and
 
 6 maintenance of infrastructure systems and facilities, using in
 
 7 whole or in part private sources of financing.
 
 8      (b)  Each proposal shall be weighed on its own merits, and
 
 9 each agreement shall be negotiated individually, and as a stand-
 
10 alone project.
 
11      (c)  Projects may be selected by the public and private
 
12 entities at their discretion.
 
13      (d)  All projects designed, constructed, and operated under
 
14 this chapter shall comply with all applicable rules and statutes
 
15 in existence at the time the agreement is executed.
 
16      (e)  The State and the counties may consult with legal,
 
17 financial, and other experts within and outside government in the
 
18 negotiation and development of the agreements.
 
19        -3 Terms of agreement.(a)  The public entity may
 
20 lease each of the projects, or applicable project segments, to
 
21 the private entities for operating purposes for up to fifty years
 
22 per segment.
 
23      (b)  The public entity may exercise any power possessed by
 

 
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 1 it to facilitate the development, construction, financing
 
 2 operation, and maintenance of infrastructure projects under this
 
 3 chapter.
 
 4      (c)  Agreements for maintenance services entered into under
 
 5 this section shall provide for reimbursement for services
 
 6 rendered by public entities.  Such reimbursement may be in cash
 
 7 or in kind.
 
 8      (d)  Agreements for police services under the agreement may
 
 9 be entered into with any qualified law enforcement agency, and
 
10 shall provide for reimbursement for services rendered by that
 
11 agency.  Such reimbursement may be in cash or in kind.
 
12      (e)  The public entity may provide services for which it is
 
13 reimbursed, including preliminary planning, environmental
 
14 certification, and preliminary design.
 
15      (f)  The plans and specifications for each project
 
16 constructed under this section shall comply with the public
 
17 entity's standards for public projects, as adjusted to
 
18 accommodate innovative techniques.
 
19      (g)  In the case of state transportation facilities, a
 
20 facility constructed by and leased to a private entity is deemed
 
21 to be a part of the state highway system for purposes of
 
22 identification, maintenance, and enforcement of traffic laws and
 
23 for the purposes of applicable sections of this chapter.
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1     (h)  Upon reversion of the facility to the public entity, the
 
 2 project must meet all applicable standards reasonably established
 
 3 by the public entity.
 
 4     (i)  Agreements shall address responsibility for
 
 5 reconstruction or renovations that are required for a facility to
 
 6 meet all applicable standards upon reversion of the facility to
 
 7 the public entity.
 
 8     (j)  In consideration for the reversion rights in these
 
 9 privately constructed facilities, the public entity may negotiate
 
10 a charge for the lease of airspace rights during the term of the
 
11 agreement.
 
12     (k)  If, after the expiration of this period, the public
 
13 entity continues to lease airspace rights to the private entity,
 
14 it shall do so at fair market value.
 
15     (l)  The agreement may also provide the private entity the
 
16 right of first refusal to undertake projects utilizing airspace
 
17 owned by the public entity in the vicinity of the project.
 
18     (m)  Agreements under this section may include any
 
19 contractual provision necessary to protect the project revenues
 
20 required to repay the costs incurred to study, plan, design,
 
21 finance, acquire, build, install, operate, enforce laws, and
 
22 maintain infrastructure systems and facilities and that will not
 
23 unreasonably inhibit or prohibit the development of additional
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 infrastructure systems and facilities.
 
 2     (n)  Agreements under this section shall include provisions
 
 3 requiring that liability insurance coverage be secured and
 
 4 maintained in amounts appropriate to protect the project's
 
 5 viability and may address public entity for design and
 
 6 construction liability where the public entity has approved
 
 7 relevant design and construction plans.
 
 8     (o)  Nothing in this chapter shall limit the right of the
 
 9 public entity to render such advice and to make such
 
10 recommendations as it deems to be in the best interests of the
 
11 State and the public.
 
12     (p)  Agreements under this section shall not be entered into
 
13 by a public entity without prior legislative approval.
 
14       -4 Financial arrangements.(a)  The public entity may
 
15 enter into agreements using federal and public entity financing
 
16 in connection with the projects, including without limitation,
 
17 grants, loans, and other measures authorized by federal and state
 
18 law, and to do such things as necessary and desirable to maximize
 
19 the funding and financing, including the formation of a revolving
 
20 loan fund to implement this section.
 
21     (b)  Agreements entered into under this section shall
 
22 authorize the private entity to lease the facilities within a
 
23 designated area or areas from the public entity, to impose user
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

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

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 negotiated between the parties.
 
 2     (g)  After expiration of the lease of a facility to a private
 
 3 entity, the public entity may continue to charge user fees or
 
 4 tolls for the use of the facility, with these revenues to be used
 
 5 for operations and maintenance of the facility, or to be paid to
 
 6 local agencies, or any combination of such uses."
 
 7                              PART II
 
 8     SECTION 3.  The purpose of this Part is to establish
 
 9 standards and criteria for a project labor agreement that is
 
10 consistent with the United States President's memorandum dated
 
11 June 5, 1997, to encourage the use of a project labor agreement
 
12 to achieve economy and efficiency in any new federal construction
 
13 project in which the State is authorized to participate or any
 
14 state public works projects over $10,000,000 such as the proposed
 
15 state prison on the island of Hawaii or the University of Hawaii-
 
16 West Oahu Campus, and to assist in public-private infrastructure
 
17 partnerships for the improvement of Hawaii's economy.
 
18     SECTION 4.  Project labor agreement.  (a)  In any federal
 
19 construction project in which the State is authorized by federal
 
20 law or regulation, or by agreement with the federal agency to
 
21 construct, or to participate in the construction of, any federal
 
22 structure or facility in the State or in any state public works
 
23 project over $10,000,000, any department or agency of the State
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 that is authorized to award a contract, on a project-by-project
 
 2 basis, may use a project labor agreement if the project labor
 
 3 agreement:
 
 4     (1)  Advances the project's procurement interest in cost,
 
 5          efficiency, and quality;
 
 6     (2)  Promotes labor-management stability and compliance with
 
 7          legal requirements governing safety and health,
 
 8          employment equal opportunity, labor and employment
 
 9          standards, and other matters; and
 
10     (3)  Is not precluded from use because of laws applicable to
 
11          the specific construction project.
 
12     (b)  If the department or agency of the State determines that
 
13 the use of a project labor agreement will serve the goals set
 
14 forth in subsection (a), the department or agency of the State
 
15 may require that every contractor or subcontractor on the project
 
16 agree, for that project, to negotiate or become a party to a
 
17 project labor agreement with unions traditionally representing
 
18 employees working in the building and construction industry as
 
19 well as other nonunion contractors, subcontractors, and
 
20 employees, and incorporate the project labor agreement into the
 
21 requests for proposals, invitations for bid under chapter 103D,
 
22 Hawaii Revised Statutes, and contract documents.
 
23     (c)  Any project labor agreement reached pursuant to this
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 section shall:
 
 2     (1)  Bind all contractors and subcontractors on the
 
 3          construction project by incorporating the project labor
 
 4          agreement into all relevant requests for proposals,
 
 5          invitations for bids under chapter 103D, Hawaii Revised
 
 6          Statutes, and contract documents;
 
 7     (2)  Fully conform to all applicable laws, regulations, and
 
 8          executive orders;
 
 9     (3)  Allow all contractors and subcontractors wishing to
 
10          compete for contracts and subcontracts on the project to
 
11          do so, without discrimination against contractors,
 
12          subcontractors, or employees based on union or nonunion
 
13          status;
 
14     (4)  Contain guarantees against strikes, lockouts, and
 
15          similar work disruptions;
 
16     (5)  Set forth effective, prompt, and mutually binding
 
17          procedures for resolving labor disputes arising during
 
18          the project; and
 
19     (6)  Provide other mechanisms for labor-management
 
20          cooperation on matters of mutual interest and concern,
 
21          including productivity, quality of work, safety, and
 
22          health.
 
23     (d)  This section does not require a department or agency of
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 the State to use a project labor agreement on any federal or
 
 2 state construction project, nor does it preclude use of a project
 
 3 labor agreement in circumstances not covered in this section.
 
 4 This section also does not require a contractor to enter into a
 
 5 project labor agreement with any particular labor organization.
 
 6     (e)  The procurement policy board, in consultation with the
 
 7 departments that are covered by this section, shall establish
 
 8 appropriate written procedures and criteria for the
 
 9 determinations set forth in subsection (a) in accordance with
 
10 chapter 91.
 
11     (f)  This section does not create any right or benefit,
 
12 substantive or procedural, enforceable by a non-state party
 
13 against the State, its departments, agencies, or
 
14 instrumentalities, its officers, or employees, or any other
 
15 person.
 
16     SECTION 5.  Chapter 103D, Hawaii Revised Statutes, is amended
 
17 by adding a new section to be appropriately designated and to
 
18 read as follows:
 
19     "103D-     Project labor agreements.  (a)  A procurement
 
20 officer, as a condition of being awarded a contract, may direct
 
21 that each responsible and responsive bidder negotiate or become a
 
22 party to a project labor agreement between the bidder and unions
 
23 traditionally representing employees working in the building and
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 construction industry as well as nonunion contractors,
 
 2 subcontractors, and employees, and shall be bound by the
 
 3 provisions of that agreement in the same manner as the provisions
 
 4 of the contract; provided that:
 
 5     (1)  The responsible and responsive bidder and all
 
 6          subcontractors on the construction project shall be
 
 7          signatories to the project labor agreement;
 
 8     (2)  Previously negotiated signatories shall be honored; and
 
 9     (3)  The project agreement shall include the applicable terms
 
10          of the standard industry-wide collective bargaining
 
11          agreements.
 
12     (b)  This section shall not preclude a bidder from submitting
 
13 a bid if the bidder presents documentation to the chief
 
14 procurement officer that for the duration of the contract those
 
15 employed by the bidder and all subcontractors will abide and be
 
16 bound to the terms of the project labor agreement.
 
17     (c)  An award of a contract shall be made to the lowest
 
18 responsible and responsive bidder who either:
 
19     (1)  Becomes a signatory to the project labor agreement
 
20          pursuant to subsection (a), with the exception of
 
21          honoring previously negotiated signatories; or
 
22     (2)  Provides documentation to the chief procurement officer
 
23          pursuant to subsection (b)."
 

 
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 1     SECTION 6.  The department of accounting and general services
 
 2 shall submit a report on the results of the use of project labor
 
 3 agreements authorized by sections 4 and 5 of this Act to the
 
 4 legislature twenty days before the convening of the regular
 
 5 session of 2003.
 
 6     SECTION 7.  This Part shall apply to project labor agreements
 
 7 entered into on or after the effective date of this Part.  All
 
 8 project labor agreements entered into before the effective date
 
 9 of this Part shall continue to be honored until their
 
10 termination.
 
11                             PART III
 
12     SECTION 8.  The legislature further finds that the importance
 
13 of the construction industry to the economy of Hawaii is not
 
14 widely acknowledged, and that statewide construction activities
 
15 would benefit from increased research and promotional efforts in
 
16 support of this vital industry by encouraging its growth and
 
17 development through public-private partnerships.
 
18     The purpose of this Part is to create a construction industry
 
19 branch under the research and economic analysis division of the
 
20 department of business, economic development, and tourism.
 
21     SECTION 9.  Chapter 201, Hawaii Revised Statutes, is amended
 
22 by adding a new section to be appropriately designated and to
 
23 read as follows:
 

 
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 1     "201-     Construction industry branch; establishment; power
 
 2 and duties.  (a)  There is established a construction industry
 
 3 branch under the research and economic analysis division of the
 
 4 department of business, economic development, and tourism.
 
 5     (b)  The branch shall be responsible for:
 
 6     (1)  Promoting, marketing, and developing the construction
 
 7          industry and public-private infrastructure agreements in
 
 8          the State;
 
 9     (2)  Promoting, coordinating, and facilitating the military
 
10          construction industry in the State;
 
11     (3)  Developing, coordinating, and implementing long-range
 
12          state policies and directions for construction and
 
13          related activities;
 
14     (4)  Coordinating all agencies and advising the private
 
15          sector in the development of construction-related
 
16          activities and resources;
 
17     (5)  Arranging for the conduct of research through
 
18          contractual services with the University of Hawaii or
 
19          any agency or other qualified persons concerning social,
 
20          economic, and environmental aspects of the construction
 
21          industry in the State;
 
22     (6)  Providing technical or other assistance to agencies and
 
23          private industry upon request;
 

 
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 1     (7)  Establishing a public information and educational
 
 2          program to inform the public of construction
 
 3          opportunities and construction-related problems;
 
 4     (8)  Encouraging the development of educational, training,
 
 5          and career counseling programs in construction; and
 
 6     (9)  Performing other functions required or authorized by
 
 7          law."
 
 8                              PART IV
 
 9     SECTION 10.  Beginning with section 8078 of the United States
 
10 Defense Appropriations Act of 1986, all subsequent Defense
 
11 Appropriations Acts require the contractor on a military
 
12 construction or services project to employ Hawaii residents when
 
13 Hawaii's unemployment rate exceeds the national average.  The
 
14 unemployment rate in Hawaii has been above the national average
 
15 since 1994, but the federal law has not been strictly enforced.
 
16 Many defense construction and service contracts have been awarded
 
17 to out-of-state contractors that hire individuals that move to
 
18 Hawaii just to work on these particular federal contracts.  This
 
19 apparently is within the scope of the law, though clearly not the
 
20 intent of section 8078.  One reason given for the failure to
 
21 strictly enforce the requirement to employ Hawaii residents is
 
22 that the term "state resident" is not defined in section 8078, in
 
23 its related provisions, or in the Federal Acquisition
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 Regulations.
 
 2     The purpose of this Part is to assure compliance with the
 
 3 federal and state laws regarding employment and bid preferences
 
 4 for State residents.  This Part establishes a definition of
 
 5 "state resident" that will provide a clear, objective, measurable
 
 6 standard in the state procurement code that can be easily
 
 7 followed, copied, and enforced by federal contracting officers in
 
 8 enforcing the preference provisions in federal law.  A clear
 
 9 definition of "state resident" in the state procurement code will
 
10 help keep profits and wages from military construction projects
 
11 in the State.
 
12     The further purpose of this Part is to define "state
 
13 contractor" and "state subcontractor" to provide state
 
14 contracting officers with clear and absolute definitions in order
 
15 that the contractors who are granted a bid preference are those
 
16 that have:
 
17     (1)  Fully availed themselves of the laws of the State; and
 
18     (2)  Committed themselves to contributing to the economy of
 
19          the State by establishing and maintaining a business
 
20          within the State and employing state residents.
 
21     In addition, this Part increases the bid preference in favor
 
22 of state contractors from seven to fifteen per cent on state
 
23 public works contracts for $8,000,000 or less, and to require a
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 review of the bid preference law by June 30, 2005.
 
 2     SECTION 11.  Section 103D-1001, Hawaii Revised Statutes, is
 
 3 amended by adding two new definitions to be inserted and to read
 
 4 as follows:
 
 5     ""State contractor" and "state subcontractor" means a person
 
 6 that:
 
 7     (1)  Is licensed as a contractor pursuant to chapter 444;
 
 8     (2)  Is licensed to conduct business in this State pursuant
 
 9          to section 237-9;
 
10     (3)  Submits a bid under the name appearing on the person's
 
11          current contracting or business license;
 
12     (4)  Is a domestic corporation, partnership, or business
 
13          organized or formed under the laws of the State;
 
14     (5)  Has maintained its principal place of business within
 
15          the State for at least two-hundred consecutive days
 
16          prior to the submission of a bid;
 
17     (6)  Has filed a Hawaii resident income tax and all other
 
18          applicable tax returns for the preceding tax year and
 
19          has paid all amounts owing on those tax returns;
 
20     (7)  Has complied with all applicable Hawaii employment,
 
21          insurance, and worker's compensation laws;
 
22     (8)  If an employer with one or more employees, one-hundred
 
23          per cent of its employees are state residents; and
 

 
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 1     (9)  If a joint venture, is composed entirely of entities
 
 2          that qualify under paragraphs (1) to (8).
 
 3     "State resident" means an individual who:
 
 4     (1)  Resides in the State at least two hundred days of the
 
 5          year; and
 
 6     (2)  Has filed a Hawaii resident income tax return in the
 
 7          taxable year immediately preceding a bid for a state
 
 8          contract by the individual's employer or business that
 
 9          is a state contractor and has paid all amounts owing on
 
10          that tax return; provided that an individual who was a
 
11          state resident, left the State to attend school or serve
 
12          in the armed forces of the United States of America, and
 
13          returned to the State to work for a state contractor is
 
14          a state resident, even though the individual has not yet
 
15          resided in the State for at least two hundred days or
 
16          filed a Hawaii resident income tax return or paid all
 
17          amounts owing on that tax return."
 
18     SECTION 12.  Section 103D-1007, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20     "[[]103D-1007[]]  Preference to bidders on state agency
 
21 contracts.(a)  The requirements in this section are in addition
 
22 to any other applicable requirements provided in this chapter.
 
23     (b)  The preference in this section may not be used in
 

 
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 1 combination with any other preference otherwise available to a
 
 2 bidder under state or federal law[.] and shall be interpreted to
 
 3 enable a state agency to increase the opportunity for more state
 
 4 contractors to succeed in their bids for state contracts and to
 
 5 more widely distribute state contracts among all state
 
 6 contractors that are qualified to bid.
 
 7     (c)  In any contract for a public works project[,] for
 
 8 $8,000,000 or less, a state agency shall award the contract to a
 
 9 bidder who [has filed all state tax returns due to the State and
 
10 paid all amounts owing on such returns for two successive years]
 
11 is a state contractor prior to submitting the bid; provided that
 
12 the amount of that bid is not more than [seven] fifteen per cent
 
13 higher than the amount bid by any competing contractor who [has
 
14 not filed or paid all applicable state taxes, and the amount of
 
15 the bid by the state tax paying bidder is $5,000,000 or less.] is
 
16 not a state contractor.
 
17     [(d)  In any contract for a public works project, a state
 
18 agency shall award the contract to a bidder who has filed all
 
19 state tax returns due to the State and paid all amounts owing on
 
20 such returns for four successive years prior to submitting the
 
21 bid; provided that the amount of that bid is not more than seven
 
22 per cent higher than the amount bid by any competing contractor
 
23 who has not filed or paid all applicable state taxes, and the
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 amount of the bid by the state tax paying bidder is more than
 
 2 $5,000,000.]
 
 3     (d)  A state contractor is qualified for the full preference
 
 4 under this section when the state contractor:
 
 5     (1)  Submits its bid with an attestation that it will perform
 
 6          all of the work required to be performed on the contract
 
 7          without any subcontract; or
 
 8     (2)  Submits its bid with an attestation that it will perform
 
 9          all of the work required to be performed on the contract
 
10          using state subcontractors, and attaches to the bid, a
 
11          list of state subcontractors that the state contractor
 
12          intends to use on the project covered by the bid.
 
13     (e)  A state contractor is qualified for a portion of the
 
14 full preference under this section when the state contractor:
 
15     (1)  Submits its bid with an attestation that it is able to
 
16          perform some of the work required to be performed using
 
17          state subcontractors that the state contractor intends
 
18          to use on the project covered by the bid, together with
 
19          a list of nonstate subcontractors that it intends to
 
20          use, the cost of those subcontractors, and a statement
 
21          as to why state subcontractors cannot be used; provided
 
22          that the statement is based on fact and is approved by
 
23          the state agency; or
 

 
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 1     (2)  Submits its bid with an attestation that it is unable to
 
 2          perform the work required to be performed on the
 
 3          contract with state subcontractors, together with a list
 
 4          of nonstate subcontractors that the state contractor
 
 5          intends to use on the project covered by the bid, the
 
 6          total cost of those subcontractors, and a statement as
 
 7          to why state subcontractors cannot be used; provided
 
 8          that the statement is based on fact and is approved by
 
 9          the state agency.
 
10     (f)  The preference to state contractors shall be reduced for
 
11 qualified state contractors under subsection (e)(1) and (2) by a
 
12 percentage that the cost of the nonstate subcontractor's contract
 
13 bears to the total amount of the state contractor's bid on the
 
14 state project covered by the bid.
 
15     [(e)] (g)  If two or more [contractors who have paid state
 
16 and county taxes or were required to submit a filing regarding
 
17 state and county taxes] state contractors are bidding on a public
 
18 works contract, [and those contractors meet the criteria outlined
 
19 in subsection (c) or (d),] the state agency shall award the
 
20 contract to the state contractor among them who has submitted the
 
21 lowest bid.
 
22     [(f)] (h)  If any federal statute or regulation precludes the
 
23 granting of federal assistance or reduces the amount of that
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 assistance for a particular public works project because of
 
 2 preference awarded by this section, this section shall not apply
 
 3 insofar as its application would preclude or reduce federal
 
 4 assistance for that work."
 
 5     SECTION 13.  No later than twenty days prior to the convening
 
 6 of the regular session of the 2001 legislature, the comptroller
 
 7 shall submit a report to the legislature evaluating the
 
 8 preference structure of 103D-1007, Hawaii Revised Statutes, in
 
 9 general by providing data on contracts involving this preference.
 
10                              PART V
 
11     SECTION 14.  If any provision of this Act, or the application
 
12 thereof to any person or circumstance is held invalid, the
 
13 invalidity does not affect other provisions or applications of
 
14 the Act which can be given effect without the invalid provision
 
15 or application, and to this end the provisions of this Act are
 
16 severable.
 
17     SECTION 15.  This Act does not affect rights and duties that
 
18 matured, penalties that were incurred, and proceedings that were
 
19 begun, before its effective date.
 
20     SECTION 16.  Statutory material to be repealed is bracketed.
 
21 New statutory material is underscored.
 
22     SECTION 17.  This Act shall take effect on July 1, 1999;
 
23 provided that part II and section 12 of this Act shall be
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 reviewed by June 30, 2005.