STAND. COM. REP. NO.487

Honolulu, Hawaii

, 2003

RE: S.B. No. 1477

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Transportation, Military Affairs, and Government Operations, to which was referred S.B. No. 1477 entitled:

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

begs leave to report as follows:

The purpose of this measure is to allow the counties to lease all or a portion of property constituting the utility property of a utility owned by the county, including the plant and equipment.

Testimony in support of this measure was received from the Honolulu County Department of Budget and Fiscal Services, Maui Department of Finance, Hawaii County Finance Department, and ALLCO Finance.

This measure authorizes counties to enter into a lease/leaseback transaction which has been used successfully and safely by many municipalities and political subdivisions in other states for many years, according to testimony. The transaction works in this manner: a county leases, on a long-term basis, county-owned assets to a private entity and then immediately leases it back for a short-term, with legal title remaining with the county. This enables the county to retain full operating control over the assets. The concept is similar to a sale and lease-back arrangement. The key element in the transaction is that the county would receive at the execution of the leases, cash from the private party for the full 100 per cent of the fair market value of the assets.

Your Committee has amended this measure by making technical, nonsubstantive amendments for clarity and style.

As affirmed by the record of votes of the members of your Committee on Transportation, Military Affairs, and Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1477, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1477, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Transportation, Military Affairs, and Government Operations,

____________________________

CAL KAWAMOTO, Chair