REPORT TITLE:
Revenue Bonds


DESCRIPTION:
Authorizes issuance of special purpose revenue bonds to Rickmar
Properties, Inc. for the purpose of constructing a district
cooling facility and pipeline distribution system in downtown
Honolulu.  (HB3014 CD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        3014
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                S.D. 1
STATE OF HAWAII                                            C.D. 1
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO SPECIAL PURPOSE REVENUE BONDS.



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

 1      SECTION 1.  The legislature finds that it is in the public
 
 2 interest to encourage the development of local district cooling
 
 3 facilities to make chilled water available to connected buildings
 
 4 for use in the provision of air conditioning to those buildings.
 
 5 The issuance of special purpose revenue bonds and refunding
 
 6 special purpose revenue bonds under this Act will encourage the
 
 7 development of facilities for the distribution of chilled water
 
 8 for these purposes by lowering interest rates in financing
 
 9 capital improvement costs associated with chilled water
 
10 distribution systems, through the use of tax exempt special
 
11 purpose revenue bonds, thereby making such projects more
 
12 economically feasible.
 
13      The legislature finds that Rickmar Properties, Inc., is
 
14 engaged in the planning, design, and construction of a district
 
15 cooling facility and pipeline distribution system in downtown
 
16 Honolulu.  The legislature further finds that the issuance of
 
17 special purpose revenue bonds and refunding special purpose
 
18 revenue bonds under this Act to assist Rickmar Properties, Inc.,
 
19 in constructing the portion of this district cooling project
 
20 consisting of its distribution system will make the development
 

 
Page 2                                                     3014
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        C.D. 1

 
 1 of such a cooling system more economically feasible and provide
 
 2 numerous benefits, including the following:
 
 3      (1)  The general public will benefit by the displacement of
 
 4           large electrical loads to off-peak hours, increased
 
 5           energy efficiency, replacement of older refrigerants
 
 6           (e.g. chloroflourocarbons), and minimization of
 
 7           refrigerant emission points;
 
 8      (2)  The general public will benefit because the lower cost
 
 9           to connect to the local district cooling facility in
 
10           comparison to building stand-alone air conditioning
 
11           systems will allow more economical construction of new
 
12           buildings, and more leasable space will be available in
 
13           both new and old buildings because some of the space
 
14           otherwise occupied by cooling equipment will not be
 
15           needed for that purpose;
 
16      (3)  The general public will benefit environmentally because
 
17           the proposed cooling facility will use brackish water,
 
18           thereby resulting in a substantial reduction in the
 
19           current use of Oahu's fresh water supply to provide air
 
20           conditioning;
 
21      (4)  Owners, tenants, and other occupants of connected
 
22           buildings will benefit economically through lower air
 
23           conditioning costs and reduced maintenance requirements
 

 
Page 3                                                     3014
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        C.D. 1

 
 1           (since individual chillers and cooling towers are
 
 2           eliminated) and the related elimination of the capital
 
 3           costs of replacing cooling systems serving individual
 
 4           buildings and such reduction of costs will be
 
 5           beneficial to the economy of the State; and
 
 6      (5)  Owners, tenants, and other occupants of connected
 
 7           buildings will benefit economically since the local
 
 8           district cooling facility will be able to take
 
 9           advantage of greater economies of scale and use off-
 
10           peak (and lower cost) electricity by local district
 
11           cooling facilities and such benefits will also promote
 
12           the general economy of the State.
 
13      SECTION 2.  The legislature further finds that the
 
14 activities of the district cooling project proposed to be
 
15 constructed by Rickmar Properties, Inc., including the
 
16 distribution system, constitute an industrial enterprise defined
 
17 in part V, chapter 39A, Hawaii Revised Statutes, and that the
 
18 cost of construction of the distribution system thereof is
 
19 qualified to be financed through the issuance of special purpose
 
20 revenue bonds under such part V.
 
21      SECTION 3.  Pursuant to part V, chapter 39A, Hawaii Revised
 
22 Statutes, the department of budget and finance is hereby
 
23 authorized, with the approval of the governor, to issue special
 

 
Page 4                                                     3014
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        C.D. 1

 
 1 purpose revenue bonds in a total amount not to exceed $19,000,000
 
 2 in one or more series, for the purpose of assisting Rickmar
 
 3 Properties, Inc. (or a partnership in which Rickmar Properties,
 
 4 Inc. is a general partner, or the successor in interest or
 
 5 assignee of Rickmar Properties, Inc.), with one or more of the
 
 6 following:
 
 7      (1)  The establishment of a distribution system through
 
 8           which chilled water produced at a water cooling
 
 9           facility will be moved to buildings wishing to be
 
10           connected to the cooling facility; and
 
11      (2)  The financing, refinancing, or both, of the costs
 
12           related to the planning, design, and construction of
 
13           the distribution system, including costs of
 
14           construction, renovation, equipping, and purchasing
 
15           tangible assets (including land and easements for such
 
16           distribution system and pipelines and other
 
17           improvements) comprising such distribution system.
 
18      SECTION 4.  The department of budget and finance shall
 
19 process applications for special purpose revenue bonds under this
 
20 Act in accordance with the requirements of its "Formal
 
21 Application for Financing of an Industrial Enterprise."  The
 
22 department shall report to the legislature twenty days before the
 
23 convening of the regular sessions of 2001 and 2002 regarding any
 

 
Page 5                                                     3014
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        C.D. 1

 
 1 status with respect to the issuance of the special purpose
 
 2 revenue bonds authorized by this Act.
 
 3      SECTION 5.  The department of budget and finance is
 
 4 authorized, with the approval of the governor, to issue from time
 
 5 to time (including times subsequent to June 30, 2003), refunding
 
 6 special purpose revenue bonds in such principal amounts as the
 
 7 department shall determine to be necessary to refund the special
 
 8 purpose revenue bonds authorized in section 3 and any refunding
 
 9 special purpose revenue bonds authorized in this section,
 
10 regardless of whether the outstanding special purpose revenue
 
11 bonds or refunding special purpose revenue bonds have matured or
 
12 are the subject of redemption, and any such refunding special
 
13 purpose revenue bonds shall be bonds for the projects and
 
14 purposes described in section 3.  In making this determination,
 
15 the department shall comply with federal law relating to the
 
16 exemption from federal income taxation of the interest on bonds
 
17 of the nature authorized under this section.
 
18      SECTION 6.  Any unused portion of the authorization to issue
 
19 new special purpose revenue bonds under this Act shall lapse as
 
20 of the close of business on June 30, 2003.
 
21      SECTION 7.  This Act shall take effect on July 1, 2000.