GOP questions House Republicans still have many financial and other questions about the method the Cayetano administration is using to replace the overcrowded Oahu Community Correctional Center.
Cayetano’s prison plan
Republicans want answers on
financing and the method
being used for the projectBy Pat Omandam
pomandam@starbulletin.com"What they're doing is not in question. It is how they're doing it," said Charles Djou (R, Kaneohe), House minority floor leader.
House and Senate GOP members were briefed yesterday by Public Safety Director Ted Sakai and Budget Director Stanley Shiraki on the status of the state's latest effort to build an adjoining prison facility at Halawa Correctional Facility.
Sakai told the legislators the state had received only one bid earlier this year, by Durrant-Media Five to build a 10-story, 1,100-bed replacement for OCCC at Halawa for $8.4 million annual lease payments for 30 years, but the state rejected it because of cost.
He said Gov. Ben Cayetano, using authority granted to him a few years ago by the state Legislature, will see if he can negotiate a contract with Durrant.
The new federal detention facility at the airport could serve as a model for the type of jail the state wants to build, he said.
"The governor is considering whether he should use the authority handed to him under the law and negotiate directly with the developer," said Sakai.
At issue for Republicans, however, is how the state wants to finance the plan.
The state wants to build the prison using what is called a certificate of participation rather than issuing general obligation bonds, which are normally used for state construction projects.
Shiraki explained that under the process, a contractor would build a prison to the state's specifications using his or her funds or loans.
In return, the state would make annual payments -- handled through a mutually acceptable third-party trustee that temporarily takes possession of the property involved -- to eventually pay the cost of the construction. Once payments are made in full, the trustee would turn over control of the land and the new prison to the state.
Shiraki said such financing has been used to build the state office building in Kapolei and to buy the Hemmeter Building in downtown Honolulu, which is being converted into the state art museum.
One advantage of such a plan is that the state can move much more quickly on a project because it does not need legislative approval, he said.
Also, the cost of the project does not count toward the ceiling or maximum amount of general obligation bonds the state can issue.
The major disadvantage, Shiraki added, is that it may cost a little bit more in interest than general obligation bonds.
"It's a different means of financing," he said.
State Rep. Colleen Meyer (R, Laie) suggested the real advantage is that the Cayetano administration does not need to deal with the Legislature. But Shiraki said that is not the reason.
Djou said questions include how much more money would it cost the state to use this process, why was there only one bidder on the contract and why is the state trying to rush through the project.
"I don't want us to rush through and make the taxpayers liable for what can be a very, very large project. Given our budget problems, we should be very careful about spending $130 million to $150 million (for a new prison)," he said.
State of Hawaii
