REPORT TITLE:
Corrections; Earnest Money


DESCRIPTION:
Makes an appropriation to the department of public safety to
indicate the intention and ability of the State of Hawaii to
proceed with the private development of a correctional facility
to reduce prison overcrowding, utilizing public funds or private
funds, or a combination of both.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
HOUSE OF REPRESENTATIVES                H.B. NO.           2739
TWENTIETH LEGISLATURE, 2000                                H.D.1
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO CORRECTIONS.



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

 1      SECTION 1.  The legislature finds that in a climate where
 
 2 the public is clamoring for mandatory sentences and longer terms
 
 3 of imprisonment, correctional facilities are in danger of being
 
 4 totally overwhelmed because of the greater number of persons
 
 5 being incarcerated.  The increasing number of inmates requires
 
 6 innovative planning and actions to prevent enormous social,
 
 7 economic, legal, and public safety repercussions.  Private
 
 8 involvement can ease overcrowding by making additional facilities
 
 9 quickly available without the cumbersome and costly process of a
 
10 traditional design/bid/build with general obligation bond
 
11 financing process.
 
12      Design/build-lease/finance facility acquisition not only
 
13 offers governments an alternative method of solving the
 
14 overcrowding problem, but it offers the following distinct
 
15 advantages over the conventional method of the constructing and
 
16 financing of prisons:
 
17      (1)  Provides a single source of responsibility;
 
18      (2)  Eliminates arguments over responsibility;
 
19      (3)  Reduces manager and administrative burden;
 

 
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 1      (4)  Protects owner from liability;
 
 2      (5)  Reduces project delivery time;
 
 3      (6)  Reduces design cost;
 
 4      (7)  Provides on-target budget assurance;
 
 5      (8)  Encourages inventive design solutions; and
 
 6      (9)  Reduces project management stress.
 
 7 To obtain a quality institution -- quicker, built to standards,
 
 8 and with fixed up front costs -- legislators and prison officials
 
 9 should consider a design/build-lease/finance approach.
 
10      There are two methods of financing the construction of
 
11 facilities for state government.  One is general obligation bond
 
12 financing, and the other is lease/finance with use of
 
13 certificates of participation.  The latter method offers the
 
14 following advantages:
 
15      (1)  The lease/finance method, along with design/build,
 
16           provides for total developer responsibility for
 
17           construction of state prisons and eventual ownership by
 
18           the State;
 
19      (2)  The lease/finance public financing method using
 
20           certificates of participation lowers payment costs for
 
21           the State, as well as provides for equity appreciation
 
22           and acquisition of the facility over the twenty-year
 
23           lease period; and
 

 
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 1      (3)  Unlike private financing and leasing from a private
 
 2           entity, lease/fiance certificates of participation
 
 3           place a permanent cap on any inflationary costs on the
 
 4           capital cost of facilities.
 
 5 In short, certificate of participation lease/purchase financing
 
 6 is the better method of financing public institutions,
 
 7 particularly when it involves delivery of complex projects which
 
 8 can be completed more efficiently and effectively by a selected
 
 9 developer with a qualified team of experienced architects,
 
10 engineers, contractors, and subcontractors.
 
11      Consequently, this Act makes an appropriation to the
 
12 department of public safety to indicate the intention and ability
 
13 of the State of Hawaii to proceed with the private development of
 
14 a correctional facility within the state of Hawaii to reduce
 
15 prison overcrowding, utilizing public funds or private funds, or
 
16 a combination of both.
 
17      SECTION 2.  There is appropriated out of the general
 
18 revenues of the State of Hawaii the sum of $1, or so much thereof
 
19 as may be necessary for fiscal year 2000-2001, to indicate the
 
20 intention and ability of the State of Hawaii to proceed with the
 
21 private development of a correctional facility within the state
 
22 of Hawaii to reduce prison overcrowding, utilizing public funds
 
23 or private funds, or a combination of both; provided that:
 

 
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 1      (a)  if private funds are utilized for the development of
 
 2           such a facility, then a certificate of participation
 
 3           meeting the requirements of chapter 37D, Hawaii Revised
 
 4           Statutes, shall be required as part of the agreement
 
 5           between the director of public safety and the private
 
 6           entity; and
 
 7      (b)  the development of this facility shall comply with
 
 8           chapter 103D-1007, Hawaii Revised Statutes.
 
 9      SECTION 3.  The sum appropriated shall be expended by the
 
10 department of public safety for the purposes of this Act.
 
11      SECTION 4.  This Act shall take effect on July 1, 2000.