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.  (SD1) 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        140
HOUSE OF REPRESENTATIVES                H.B. NO.           S.D. 1
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. 1
                                                        
                                                        

 
 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. 1
                                                        
                                                        

 
 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)  Agreements shall provide
 
20 for private ownership of a project during the construction
 
21 period.
 
22      (b)  After completion and final acceptance of each project
 
23 or discrete segment thereof, the agreement shall provide for
 

 
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                                     H.B. NO.           S.D. 1
                                                        
                                                        

 
 1 public ownership of the infrastructure facilities and lease to
 
 2 the private entity unless the public entity agrees to provide for
 
 3 ownership of the facility by the private entity during the term
 
 4 of the agreement.
 
 5      (c)  The public entity may lease each of the projects, or
 
 6 applicable project segments, to the private entities for
 
 7 operating purposes for up to fifty years per segment.
 
 8      (d)  The public entity may exercise any power possessed by
 
 9 it to facilitate the development, construction, financing
 
10 operation, and maintenance of infrastructure projects under this
 
11 chapter.
 
12      (e)  Agreements for maintenance services entered into under
 
13 this section shall provide for reimbursement for services
 
14 rendered by public entities.  Such reimbursement may be in cash
 
15 or in kind.
 
16      (f)  Agreements for police services under the agreement may
 
17 be entered into with any qualified law enforcement agency, and
 
18 shall provide for reimbursement for services rendered by that
 
19 agency.  Such reimbursement may be in cash or in kind.
 
20      (g)  The public entity may provide services for which it is
 
21 reimbursed, including preliminary planning, environmental
 
22 certification, and preliminary design.
 
23      (h)  The plans and specifications for each project
 

 
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 1 constructed under this section shall comply with the public
 
 2 entity's standards for public projects, as adjusted to
 
 3 accommodate innovative techniques.
 
 4      (i)  In the case of state transportation facilities, a
 
 5 facility constructed by and leased to a private entity is deemed
 
 6 to be a part of the state highway system for purposes of
 
 7 identification, maintenance, and enforcement of traffic laws and
 
 8 for the purposes of applicable sections of this chapter.
 
 9     (j)  Upon reversion of the facility to the public entity, the
 
10 project must meet all applicable standards reasonably established
 
11 by the public entity.
 
12     (k)  Agreements shall address responsibility for
 
13 reconstruction or renovations that are required for a facility to
 
14 meet all applicable standards upon reversion of the facility to
 
15 the public entity.
 
16     (l)  For the purpose of facilitating these projects and to
 
17 assist the private entity in the financing, development,
 
18 construction, and operation of the infrastructure systems and
 
19 facilities, the agreements may include provision for the public
 
20 entity to exercise its authority, including:
 
21      (1)  The lease of facilities, rights of way, and airspace,
 
22           including airspace next to, above, or below the right
 
23           of way associated or to be associated with the private
 

 
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 1           entity's infrastructure facility;
 
 2      (2)  Exercise of the power of eminent domain;
 
 3      (3)  Authority to negotiate acquisition of rights of way in
 
 4           excess of appraised value;
 
 5      (4)  Granting of development rights and opportunities;
 
 6      (5)  Granting of necessary easements and rights of access,
 
 7           issuance of permits and other authorizations, leasing
 
 8           existing rights of way or rights of way subsequently
 
 9           acquired with public or private financing;
 
10      (6)  Protection from competition;
 
11      (7)  Remedies in the event of default of either of the
 
12           parties;
 
13      (8)  Granting of contractual and real property rights;
 
14      (9)  Liability during construction and the term of the
 
15           lease; and
 
16     (10)  Other provisions deemed necessary by the public entity.
 
17      (m)  In consideration for the reversion rights in these
 
18 privately constructed facilities, the public entity may negotiate
 
19 a charge for the lease of airspace rights during the term of the
 
20 agreement.
 
21      (n)  If, after the expiration of this period, the public
 
22 entity continues to lease airspace rights to the private entity,
 
23 it shall do so at fair market value.
 

 
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 1      (o)  The agreement may also provide the private entity the
 
 2 right of first refusal to undertake projects utilizing airspace
 
 3 owned by the public entity in the vicinity of the project.
 
 4      (p)  Agreements under this section may include any
 
 5 contractual provision necessary to protect the project revenues
 
 6 required to repay the costs incurred to study, plan, design,
 
 7 finance, acquire, build, install, operate, enforce laws, and
 
 8 maintain infrastructure systems and facilities and that will not
 
 9 unreasonably inhibit or prohibit the development of additional
 
10 infrastructure systems and facilities.
 
11      (q)  Agreements under this section shall include provisions
 
12 requiring that liability insurance coverage be secured and
 
13 maintained in amounts appropriate to protect the project's
 
14 viability and may address public entity for design and
 
15 construction liability where the public entity has approved
 
16 relevant design and construction plans.
 
17      (r)  Nothing in this chapter shall limit the right of the
 
18 public entity to render such advice and to make such
 
19 recommendations as it deems to be in the best interests of the
 
20 State and the public.
 
21      (s)  Agreements under this section shall not be entered into
 
22 by a public entity without prior legislative approval.
 
23      §  -4 Financial arrangements.(a)  The public entity may
 

 
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                                     H.B. NO.           S.D. 1
                                                        
                                                        

 
 1 enter into agreements using federal and public entity financing
 
 2 in connection with the projects, including without limitation,
 
 3 grants, loans, and other measures authorized by federal and state
 
 4 law, and to do such things as necessary and desirable to maximize
 
 5 the funding and financing, including the formation of a revolving
 
 6 loan fund to implement this section.
 
 7      (b)  Agreements entered into under this section shall
 
 8 authorize the private entity to lease the facilities within a
 
 9 designated area or areas from the public entity, to impose user
 
10 fees or tolls within the designated area, and to allow a
 
11 reasonable rate of return on investment, as established through a
 
12 negotiated agreement between the public entity and the private
 
13 entity.
 
14      (c)  The negotiated agreement shall determine a maximum rate
 
15 of return on investment, based on project characteristics.
 
16      (d)  Agreements may include negotiated "incentive" rates of
 
17 return in excess of the negotiated maximum rate of return on
 
18 investment.  The incentive rates of return shall be designed to
 
19 provide financial benefits to the public entity and the private
 
20 entity, given the attainment of various safety, performance, or
 
21 infrastructure demand management goals.
 
22      (e)  Agreements shall require that, over the term of the
 
23 ownership or lease, the user fees or toll revenues be applied to
 

 
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                                     H.B. NO.           S.D. 1
                                                        
                                                        

 
 1 payment of the private entity's capital outlay costs for the
 
 2 project, including interest expense, the costs associated with
 
 3 operations, collection of user fees or toll revenues, maintenance
 
 4 and administration of the facility, reimbursement to the public
 
 5 entity for the costs of project review and oversight, technical
 
 6 and law enforcement services, establishment of a fund to assure
 
 7 the adequacy of maintenance expenditures, and a reasonable return
 
 8 on investment to the private entity.
 
 9      (f)  The use of any excess toll revenues or user fees may be
 
10 negotiated between the parties.
 
11      (g)  After expiration of the lease of a facility to a
 
12 private entity, the public entity may continue to charge user
 
13 fees or tolls for the use of the facility, with these revenues to
 
14 be used for operations and maintenance of the facility, or to be
 
15 paid to local agencies, or any combination of such uses."
 
16                              PART II
 
17      SECTION 3.  The purpose of this Part is to establish
 
18 standards and criteria for a project labor agreement that is
 
19 consistent with the United States President's memorandum dated
 
20 June 5, 1997, to encourage the use of a project labor agreement
 
21 to achieve economy and efficiency in any new federal construction
 
22 project in which the State is authorized to participate or any
 
23 state public works projects over $10,000,000 such as the proposed
 

 
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 1 state prison on the island of Hawaii or the University of Hawaii-
 
 2 West Oahu Campus, and to assist in public-private infrastructure
 
 3 partnerships for the improvement of Hawaii's economy.
 
 4      SECTION 4.  Project labor agreement.  (a)  In any federal
 
 5 construction project in which the State is authorized by federal
 
 6 law or regulation, or by agreement with the federal agency to
 
 7 construct, or to participate in the construction of, any federal
 
 8 structure or facility in the State or in any state public works
 
 9 project over $10,000,000, any department or agency of the State
 
10 that is authorized to award a contract, on a project-by-project
 
11 basis, may use a project labor agreement if the project labor
 
12 agreement:
 
13      (1)  Advances the project's procurement interest in cost,
 
14           efficiency, and quality;
 
15      (2)  Promotes labor-management stability and compliance with
 
16           legal requirements governing safety and health,
 
17           employment equal opportunity, labor and employment
 
18           standards, and other matters; and
 
19      (3)  Is not precluded from use because of laws applicable to
 
20           the specific construction project.
 
21      (b)  If the department or agency of the State determines
 
22 that the use of a project labor agreement will serve the goals
 
23 set forth in subsection (a), the department or agency of the
 

 
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                                     H.B. NO.           S.D. 1
                                                        
                                                        

 
 1 State may require that every contractor or subcontractor on the
 
 2 project agree, for that project, to negotiate or become a party
 
 3 to a project labor agreement with unions traditionally
 
 4 representing employees working in the building and construction
 
 5 industry as well as other nonunion contractors, subcontractors,
 
 6 and employees, and incorporate the project labor agreement into
 
 7 the requests for proposals, invitations for bid under chapter
 
 8 103D, Hawaii Revised Statutes, and contract documents.
 
 9      (c)  Any project labor agreement reached pursuant to this
 
10 section shall:
 
11      (1)  Bind all contractors and subcontractors on the
 
12           construction project by incorporating the project labor
 
13           agreement into all relevant requests for proposals,
 
14           invitations for bids under chapter 103D, Hawaii Revised
 
15           Statutes, and contract documents;
 
16      (2)  Fully conform to all applicable laws, regulations, and
 
17           executive orders;
 
18      (3)  Allow all contractors and subcontractors wishing to
 
19           compete for contracts and subcontracts on the project
 
20           to do so, without discrimination against contractors,
 
21           subcontractors, or employees based on union or nonunion
 
22           status;
 
23      (4)  Contain guarantees against strikes, lockouts, and
 

 
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                                     H.B. NO.           S.D. 1
                                                        
                                                        

 
 1           similar work disruptions;
 
 2      (5)  Set forth effective, prompt, and mutually binding
 
 3           procedures for resolving labor disputes arising during
 
 4           the project; and
 
 5      (6)  Provide other mechanisms for labor-management
 
 6           cooperation on matters of mutual interest and concern,
 
 7           including productivity, quality of work, safety, and
 
 8           health.
 
 9      (d)  This section does not require a department or agency of
 
10 the State to use a project labor agreement on any federal or
 
11 state construction project, nor does it preclude use of a project
 
12 labor agreement in circumstances not covered in this section.
 
13 This section also does not require a contractor to enter into a
 
14 project labor agreement with any particular labor organization.
 
15      (e)  The procurement policy board, in consultation with the
 
16 departments that are covered by this section, shall establish
 
17 appropriate written procedures and criteria for the
 
18 determinations set forth in subsection (a) in accordance with
 
19 chapter 91.
 
20      (f)  This section does not create any right or benefit,
 
21 substantive or procedural, enforceable by a non-state party
 
22 against the State, its departments, agencies, or
 
23 instrumentalities, its officers, or employees, or any other
 

 
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 1 person.
 
 2      SECTION 5.  Chapter 103D, Hawaii Revised Statutes, is
 
 3 amended by adding a new section to be appropriately designated
 
 4 and to read as follows:
 
 5      "§103D-     Project labor agreements.  (a)  A procurement
 
 6 officer, as a condition of being awarded a contract, may direct
 
 7 that each responsible and responsive bidder negotiate or become a
 
 8 party to a project labor agreement between the bidder and unions
 
 9 traditionally representing employees working in the building and
 
10 construction industry as well as nonunion contractors,
 
11 subcontractors, and employees, and shall be bound by the
 
12 provisions of that agreement in the same manner as the provisions
 
13 of the contract; provided that:
 
14      (1)  The responsible and responsive bidder and all
 
15           subcontractors on the construction project shall be
 
16           signatories to the project labor agreement;
 
17      (2)  Previously negotiated signatories shall be honored; and
 
18      (3)  The project agreement shall include the applicable
 
19           terms of the standard industry-wide collective
 
20           bargaining agreements.
 
21      (b)  This section shall not preclude a bidder from
 
22 submitting a bid if the bidder presents documentation to the
 
23 chief procurement officer that for the duration of the contract
 

 
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                                     H.B. NO.           S.D. 1
                                                        
                                                        

 
 1 those employed by the bidder and all subcontractors will abide
 
 2 and be bound to the terms of the project labor agreement.
 
 3      (c)  An award of a contract shall be made to the lowest
 
 4 responsible and responsive bidder who either:
 
 5      (1)  Becomes a signatory to the project labor agreement
 
 6           pursuant to subsection (a), with the exception of
 
 7           honoring previously negotiated signatories; or
 
 8      (2)  Provides documentation to the chief procurement officer
 
 9           pursuant to subsection (b)."
 
10      SECTION 6.  The department of accounting and general
 
11 services shall submit a report on the results of the use of
 
12 project labor agreements authorized by sections 4 and 5 of this
 
13 Act to the legislature twenty days before the convening of the
 
14 regular session of 2003.
 
15      SECTION 7.  This Part shall apply to project labor
 
16 agreements entered into on or after the effective date of this
 
17 Part.  All project labor agreements entered into before the
 
18 effective date of this Part shall continue to be honored until
 
19 their termination.
 
20                             PART III
 
21      SECTION 8.  The legislature further finds that the
 
22 importance of the construction industry to the economy of Hawaii
 
23 is not widely acknowledged, and that statewide construction
 

 
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                                     H.B. NO.           S.D. 1
                                                        
                                                        

 
 1 activities would benefit from increased research and promotional
 
 2 efforts in support of this vital industry by encouraging its
 
 3 growth and development through public-private partnerships.
 
 4      The purpose of this Part is to create a construction
 
 5 industry branch under the research and economic analysis division
 
 6 of the department of business, economic development, and tourism.
 
 7      SECTION 9.  Chapter 201, Hawaii Revised Statutes, is amended
 
 8 by adding a new section to be appropriately designated and to
 
 9 read as follows:
 
10      "§201-     Construction industry branch; establishment;
 
11 power and duties.  (a)  There is established a construction
 
12 industry branch under the research and economic analysis division
 
13 of the department of business, economic development, and tourism.
 
14      (b)  The branch shall be responsible for:
 
15      (1)  Promoting, marketing, and developing the construction
 
16           industry and public-private infrastructure agreements
 
17           in the State;
 
18      (2)  Promoting, coordinating, and facilitating the military
 
19           construction industry in the State;
 
20      (3)  Developing, coordinating, and implementing long-range
 
21           state policies and directions for construction and
 
22           related activities;
 
23      (4)  Coordinating all agencies and advising the private
 

 
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 1           sector in the development of construction-related
 
 2           activities and resources;
 
 3      (5)  Arranging for the conduct of research through
 
 4           contractual services with the University of Hawaii or
 
 5           any agency or other qualified persons concerning
 
 6           social, economic, and environmental aspects of the
 
 7           construction industry in the State;
 
 8      (6)  Providing technical or other assistance to agencies and
 
 9           private industry upon request;
 
10      (7)  Establishing a public information and educational
 
11           program to inform the public of construction
 
12           opportunities and construction-related problems;
 
13      (8)  Encouraging the development of educational, training,
 
14           and career counseling programs in construction; and
 
15      (9)  Performing other functions required or authorized by
 
16           law."
 
17                              PART IV
 
18      SECTION 10.  Beginning with section 8078 of the United
 
19 States Defense Appropriations Act of 1986, all subsequent Defense
 
20 Appropriations Acts require the contractor on a military
 
21 construction or services project to employ Hawaii residents when
 
22 Hawaii's unemployment rate exceeds the national average.  The
 
23 unemployment rate in Hawaii has been above the national average
 

 
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                                     H.B. NO.           S.D. 1
                                                        
                                                        

 
 1 since 1994, but the federal law has not been strictly enforced.
 
 2 Many defense construction and service contracts have been awarded
 
 3 to out-of-state contractors that hire individuals that move to
 
 4 Hawaii just to work on these particular federal contracts.  This
 
 5 apparently is within the scope of the law, though clearly not the
 
 6 intent of section 8078.  One reason given for the failure to
 
 7 strictly enforce the requirement to employ Hawaii residents is
 
 8 that the term "state resident" is not defined in section 8078, in
 
 9 its related provisions, or in the Federal Acquisition
 
10 Regulations.
 
11      The purpose of this Part is to assure compliance with the
 
12 federal and state laws regarding employment and bid preferences
 
13 for State residents when public entities enter into public-
 
14 private infrastructure partnerships.  This Part establishes a
 
15 definition of "state resident" that will provide a clear,
 
16 objective, measurable standard in the state procurement code that
 
17 can be easily followed, copied, and enforced by federal
 
18 contracting officers in enforcing the preference provisions in
 
19 federal law.  A clear definition of "state resident" in the state
 
20 procurement code will help keep profits and wages from military
 
21 construction projects in the State.
 
22      The further purpose of this Part is to define "state
 
23 contractor", "state subcontractor" to provide state contracting
 

 
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 1 officers with clear and absolute definitions, increase the bid
 
 2 preference in favor of state contractors from seven to fifteen
 
 3 percent on state public works contracts for $30,000,000 or less,
 
 4 and to require a review of the bid preference law by June 30,
 
 5 2005.
 
 6      SECTION 11.  Section 103D-1001, Hawaii Revised Statutes, is
 
 7 amended by adding two new definitions to be inserted and to read
 
 8 as follows:
 
 9      ""State contractor" and "state subcontractor" means a
 
10 contractor who is licensed by the State as a contractor, is doing
 
11 business in the State, and if the contractor is:
 
12      (1)  An individual, the individual, and at least one-hundred
 
13           per cent of the individual's employees shall be state
 
14           residents;
 
15      (2)  A corporation or limited liability company, not less
 
16           than eighty-five per cent of the total number of
 
17           officers, directors, members, and shareholders, and
 
18           one-hundred per cent of the employees of the
 
19           corporation or limited liability company shall be state
 
20           residents;
 
21      (3)  A partnership, including general, limited, and limited
 
22           liability partnerships, not less than eighty-five per
 
23           cent of the total number of general and limited
 

 
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                                     H.B. NO.           S.D. 1
                                                        
                                                        

 
 1           partners, and one-hundred per cent of the employees of
 
 2           the partnership shall be state residents;
 
 3      (4)  A joint venture or other business entity, not less than
 
 4           eighty-five per cent of the total number of owners,
 
 5           officers, and other individuals with a monetary
 
 6           investment in the business entity, and one-hundred per
 
 7           cent of the employees of the joint venture or business
 
 8           entity shall be state residents; or
 
 9      (5)  A combination of the foregoing business entities, not
 
10           less than eighty-five per cent of the total number of
 
11           officers, directors, shareholders, general and limited
 
12           partners, and members with a monetary investment in the
 
13           entity, and one-hundred per cent of the employees of
 
14           the business entity shall be state residents.
 
15      "State resident" means an individual who:
 
16      (1)  Resides in the State at least two hundred days of the
 
17           year; and
 
18      (2)  Has filed a Hawaii resident income tax return in the
 
19           taxable year immediately preceding a bid for a state
 
20           contract by the individual's employer or business that
 
21           is a state contractor; provided that an individual who
 
22           was a state resident, left the State to attend school
 
23           or serve in the armed forces of the United States of
 

 
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 1           America, and returned to the State to work for a state
 
 2           contractor is a state resident, even though the
 
 3           individual has not yet resided in the State for at
 
 4           least two hundred days or filed a Hawaii resident
 
 5           income tax return."
 
 6      SECTION 12.  Section 103D-1007, Hawaii Revised Statutes, is
 
 7 amended to read as follows:
 
 8      "[[]§103D-1007[]]  Preference to bidders on state agency
 
 9 contracts.(a)  The requirements in this section are in addition
 
10 to any other applicable requirements provided in this chapter.
 
11      (b)  The preference in this section may not be used in
 
12 combination with any other preference otherwise available to a
 
13 bidder under state or federal law.
 
14      (c)  In any contract for a public works project[,] for
 
15 $30,000,000 or less, a state agency shall award the contract to a
 
16 bidder who [has filed all state tax returns due to the State and
 
17 paid all amounts owing on such returns for two successive years]
 
18 is a state contractor prior to submitting the bid; provided that
 
19 the amount of that bid is not more than [seven] fifteen per cent
 
20 higher than the amount bid by any competing contractor who [has
 
21 not filed or paid all applicable state taxes, and the amount of
 
22 the bid by the state tax paying bidder is $5,000,000 or less.] is
 
23 not a state contractor.
 

 
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 1      [(d)  In any contract for a public works project, a state
 
 2 agency shall award the contract to a bidder who has filed all
 
 3 state tax returns due to the State and paid all amounts owing on
 
 4 such returns for four successive years prior to submitting the
 
 5 bid; provided that the amount of that bid is not more than seven
 
 6 per cent higher than the amount bid by any competing contractor
 
 7 who has not filed or paid all applicable state taxes, and the
 
 8 amount of the bid by the state tax paying bidder is more than
 
 9 $5,000,000.]
 
10      (d)  A state contractor is qualified for the full preference
 
11 under this section when the state contractor:
 
12      (1)  Submits its bid with an attestation that it will
 
13           perform all of the work required to be performed on the
 
14           contract without any subcontract; or
 
15      (2)  Submits its bid with an attestation that it will
 
16           perform all of the work required to be performed on the
 
17           contract using state subcontractors, and attaches to
 
18           the bid, a list of state subcontractors that the state
 
19           contractor intends to use on the project covered by the
 
20           bid.
 
21      (e)  A state contractor is qualified for a portion of the
 
22 full preference under this section when the state contractor:
 
23      (1)  Submits its bid with an attestation that it is able to
 

 
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 1           perform some of the work required to be performed using
 
 2           state subcontractors that the state contractor intends
 
 3           to use on the project covered by the bid, together with
 
 4           a list of nonstate subcontractors that it intends to
 
 5           use, the cost of those subcontractors, and a statement
 
 6           as to why state subcontractors cannot be used; provided
 
 7           that the statement is based on fact and is approved by
 
 8           the state agency; or
 
 9      (2)  Submits its bid with an attestation that it is unable
 
10           to perform the work required to be performed on the
 
11           contract with state subcontractors, together with a
 
12           list of nonstate subcontractors that the state
 
13           contractor intends to use on the project covered by the
 
14           bid, the total cost of those subcontractors, and a
 
15           statement as to why state subcontractors cannot be
 
16           used; provided that the statement is based on fact and
 
17           is approved by the state agency.
 
18      (f)  The preference to state contractors shall be reduced
 
19 for qualified state contractors under subsection (e)(1) and (2)
 
20 by a percentage that the cost of the subcontractor's contract
 
21 bears to the total amount of the state contractor's bid on the
 
22 state project covered by the bid.
 
23      [(e)] (g)  If two or more [contractors who have paid state
 

 
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 1 and county taxes or were required to submit a filing regarding
 
 2 state and county taxes] state contractors are bidding on a public
 
 3 works contract, [and those contractors meet the criteria outlined
 
 4 in subsection (c) or (d),] the state agency shall award the
 
 5 contract to the state contractor among them who has submitted the
 
 6 lowest bid.
 
 7      [(f)] (h)  If any federal statute or regulation precludes
 
 8 the granting of federal assistance or reduces the amount of that
 
 9 assistance for a particular public works project because of
 
10 preference awarded by this section, this section shall not apply
 
11 insofar as its application would preclude or reduce federal
 
12 assistance for that work."
 
13      SECTION 13.  No later than twenty days prior to the
 
14 convening of the regular session of the 2001 legislature, the
 
15 comptroller shall submit a report to the legislature evaluating
 
16 the preference structure of 103D-1007, Hawaii Revised Statutes,
 
17 in general by providing data on contracts involving this
 
18 preference.
 
19                              PART V
 
20      SECTION 14.  If any provision of this Act, or the
 
21 application thereof to any person or circumstance is held
 
22 invalid, the invalidity does not affect other provisions or
 
23 applications of the Act which can be given effect without the
 

 
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 1 invalid provision or application, and to this end the provisions
 
 2 of this Act are severable.
 
 3      SECTION 15.  This Act does not affect rights and duties that
 
 4 matured, penalties that were incurred, and proceedings that were
 
 5 begun, before its effective date.
 
 6      SECTION 16.  Statutory material to be deleted is bracketed.
 
 7 New statutory material is underscored.
 
 8      SECTION 17.  This Act shall take effect on July 1, 1999;
 
 9 provided that part II and section 12 of this Act shall be
 
10 reviewed by June 30, 2005.