Source: https://www.capitol.hawaii.gov/session2019/bills/SB990_.HTM
Timestamp: 2019-07-17 08:21:38
Document Index: 363539043

Matched Legal Cases: ['§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206', '§206']

SECTION 1. Chapter 206M, Hawaii Revised Statutes, is amended by adding three new parts to be appropriately designated and to read as follows:
"Part A. ECONOMIC DEVELOPMENT PROGRAM
§206M-A Definitions. As used in this part:
"Enterprise" means a person with a place of business in Hawaii which is, or proposes to be, engaged in business in Hawaii; provided that the endeavor shall not be devoted to the sale of goods at retail, construction of housing, or tourism-related services.
(4) General or limited partnership interests.
§206M-B Economic development program; guidelines. (a) The development corporation shall establish an economic development program, consisting of economic development projects, to encourage economic development and diversification in Hawaii through innovative actions in cooperation with private enterprises. The development corporation may use public funds to provide incentives to private investment activity, by co-investing public funds in private financial organizations to increase the impact of public investment while utilizing the investment acumen of the private sector, and by using public funds to reduce the risks of private investments. The development corporation shall have the flexibility to provide various types of financial assistance. When providing financial assistance, the development corporation shall make provision for the recovery of its expenditures, as far as possible.
(b) The development corporation shall evaluate all programs after three years to determine their effectiveness.
(c) The development corporation shall establish rules to assure equal opportunity to minority-owned businesses, and shall encourage the development of minority-owned businesses.
(d) The development corporation shall support and encourage participation by Hawaii companies in federal grant programs, such as the Small Business Innovation Research Program.
(e) Financial participation shall be made on the condition that the recipient of the assistance shall utilize the money to assist economic development projects within the State that have potential for creating new jobs or retaining current jobs within the State.
(f) Financial participation by the development corporation in private financial investment funds shall be made with the provision that the private fund shall make investments in Hawaii in amounts at least equal to the amount of state participation.
(g) The development corporation shall not make direct investments in individual businesses except upon a two-thirds vote of the board in each case considered. When deciding whether to enter into a direct investment, the development corporation shall consider whether:
(4) The project is located or will locate in the State and has a reasonable potential to create desirable employment opportunities for residents of the State;
(h) Investments by the development corporation to persons shall be made on the basis of solicitation and a competitive technical review process, subject to the availability of funds allocated to the development corporation for making investments in the economic development revolving fund under section 206M-C. Investments by the development corporation shall not be subject to chapter 42F. Any organization approved by the development corporation for an investment shall:
§206M-C Economic development revolving fund. There is established the economic development revolving fund. The following moneys shall be deposited into the economic development revolving fund and shall not be considered part of the general fund: all moneys appropriated by the legislature, received as repayments of loans, earned on investments, received pursuant to a venture agreement, received as royalties, received as premiums or fees charged by the development corporation, or otherwise received by the development corporation related to economic development projects.
§206M-D Business and industry evaluation and priorities for job opportunity and economic development. The development corporation shall develop procedures to set priorities as to which types of businesses and industries are most likely to provide significant opportunities for economic development and diversification in the State, consistent with the purposes of this part. This evaluation shall take into account the guidelines provided by the state plan for economic development. Based on these findings, the development corporation shall establish targets by which the operations and programs of the development corporation shall be guided.
§206M-E Requests for assistance from development corporation; procedure. (a) The board shall approve or disapprove requests for assistance within ninety days of receiving a written application. Upon written request by an applicant, the board may reconsider its denial of an application for assistance or may waive the ninety-day deadline for approving or disapproving an application.
(b) Any person who submits any statement, report, application, or other document to the development corporation which is known to the person to be false in any material respect shall be guilty of a class C felony.
(c) The development corporation may condition any assistance of any type by placing restrictions on the recipient in regard to the recipient's assets or indebtedness or in any other manner deemed appropriate by the development corporation. A recipient who accepts assistance from the development corporation shall be deemed to agree to be bound by any conditions or restrictions imposed by the development corporation.
§206M-F Private sector financial support. Significant private sector financial support shall be associated with any economic development project for which the development corporation provides assistance.
§206M-G Limitations on debt owed to development corporation. Not more than $5,000,000 in financial assistance, excluding rights and royalties under a venture capital agreement, shall be provided to any one enterprise at any time. The direct investments of the development corporation in an economic development project shall not exceed five percent of the assets of the development corporation, excluding rights and royalties under a venture capital agreement; provided that by a two-thirds vote of the board, this amount may be increased to a limit of twenty-five per cent of the total assets of the development corporation.
§206M-H Seed capital assistance program; establishment. The development corporation shall establish a program for seed capital assistance.
§206M-I Seed capital investments. Subject to this part, the development corporation may invest in:
(1) A certified development company under sections 501 to 503 of the Small Business Investment Act of 1958, title 15 United States Code sections 695 to 697, and the regulations adopted under those sections;
(2) A small business investment company under title 15 United States Code sections 631 to 634, 636 to 649, and the regulations adopted under those sections;
§206M-J Purposes and terms of seed capital investments. (a) Investments may be used for any purpose consistent with the purposes and objectives of this part, including but not limited to:
§206M-K Venture capital assistance program; establishment. The development corporation shall establish a program for venture capital.
§206M-L Venture capital investments. Subject to this part, the development corporation may invest in:
§206M-M Purposes and terms of venture capital investments. (a) Investments may be used for any purpose consistent with the purposes and objectives of this part.
§206M-N Capital access program; establishment. The development corporation shall establish a program for capital access.
§206M-O Financial assistance. The development corporation, through the program for capital access, may:
(1) Procure insurance, a guarantee, or a letter of credit from any source for all or part of a loan, debenture, or lease of others, public or private, or a revenue bond issue of the State or other entity or authority authorized to issue revenue bonds; and
§206M-P Purposes and priorities required in the procuring of insurance, loan guarantees, or letters of credit. (a) Insurance, guarantees, or letters of credit procured pursuant to section 206M-O shall be procured only for economic development projects within the State that are consistent with the purposes and objectives of this part.
§206M-Q Conditions on procuring of insurance, loan guarantees, or letters of credit. (a) Insurance, guarantees, or letters of credit shall not be procured pursuant to section 206M-O unless the development corporation is assured that the loans, debentures, or leases insured, or guaranteed, or for which letters of credit are issued, shall be used to assist economic development projects that also have significant private sector financial support.
(c) The development corporation shall charge the lender or the borrower, or both, a fee or premium for procuring loan, debenture, or lease insurance, a guarantee, or a letter of credit. Rules for premiums or fees shall be established by the development corporation.
§206M-R Program for capital access participation agreements. The development corporation shall enter into agreements with lenders for participation in the program for capital access that shall include but not be limited to:
§206M-S Establishment of special funds to secure loan insurance obligations; source of funds. The development corporation may establish a special fund or funds into which fees or premiums collected by the development corporation are deposited.
§206M-T Annual report. The development corporation shall submit a complete and detailed report of the economic development program to the legislature no later than twenty days prior to the convening of each regular session.
§206M-U Annual audit. The books and records of the development corporation relating to economic development projects shall be subject to an annual audit by an independent auditor.
§206M-V Construction of part. This part shall be liberally construed to effect its purpose."
Part B. hawaii technology investment program
§206M-AA Definitions. As used in this part:
"Computer program" means an ordered set of computer data representing coded instructions or statements that, when executed by a computer, causes the computer to perform one or more computer operations.
(3) Chartered as an agency of the federal government;
(5) Any other entity otherwise authorized to do business in the State that meets the requirements of this part.
"Program manager" means a financial organization selected by the development corporation to manage the program.
(1) Means a business, employing or owning capital or property, or maintaining an office, in this State that:
(A) Conducts more than fifty per cent of its activities in performing qualified research in the State; or
(B) Any banking, insurance, financing, leasing, rental, investing, or similar business; any farming business, including the business of raising or harvesting trees; any business involving the production or extraction of products of a charter with respect to which a deduction is allowable under section 611 (with respect to allowance of deduction for depletion), 613 (with respect to basis for percentage depletion), or 613A (with respect to limitation on percentage depleting in cases of oil and gas wells) of the Internal Revenue Code of 1986, as amended;
"Venture capital investment" means any of the following investments in a qualified high technology business:
(5) Membership interests in limited liability companies.
§206M-BB Formation of Hawaii technology investment program. (a) The development corporation shall establish the Hawaii technology investment program for the purpose of allowing individual investors to contribute to the program to invest venture capital in businesses in Hawaii.
(b) The development corporation may implement the Hawaii technology investment program through a regulated investment company under the terms and conditions established by this section. The development corporation may make changes to the program as required for participants to obtain the federal and state income tax benefits or treatment provided by sections 851 to 855 of the federal Internal Revenue Code of 1986, as amended.
The development corporation may establish a program in which the dividends distributed by the regulated investment company are exempt from income taxation under chapter 235. If the development corporation establishes a program that is proposed to be exempt from income taxation under chapter 235, it shall furnish sufficient information and notify the department of taxation and investors of the tax exempt status of that program.
(c) The development corporation may implement the program through the use of financial organizations as program managers. Under the program, individuals may establish accounts directly with a program manager.
(d) The development corporation may solicit proposals from one or more financial organizations to act as a program manager. Financial organizations submitting proposals shall describe the investment instrument. The development corporation shall select as program managers the financial organizations from among the bidding financial organizations that demonstrate the most advantageous combination to potential program participants and this State, based on the following factors:
(2) The ability of the financial organization to establish or act as a regulated investment company for the purposes of this part;
(e) The development corporation may enter into a management contract of up to ten years with a financial organization. The financial organization shall provide investment instruments meeting the requirements of this section. The management contract shall include, at a minimum, terms requiring the financial organization to:
(2) Keep adequate records of each account, keep each account segregated from each other's account, and provide the development corporation with the information necessary to prepare any necessary statements;
(3) Provide the development corporation with the information necessary to determine compliance with this section;
(4) Provide the development corporation access to the books and records of the financial organization to the extent necessary to determine compliance with the contract;
(6) Be audited at least annually by a firm of independent certified public accountants selected by the financial organization, and provide the results of the audit to the development corporation; and
(7) Provide the development corporation with copies of all regulatory filings and reports related to the program made by the financial organization during the term of the management contract or while it is holding any accounts, other than confidential filings or reports that will not become part of the program. The financial organization shall make available for review by the development corporation, the results of any periodic examination of the financial organization by any state or federal banking, insurance, or securities commission, except to the extent that the report or reports may not be disclosed under applicable law or the rules of the examining agency.
(f) The development corporation may require an audit to be conducted on the operations and financial position of the program manager at any time if the development corporation has any reason to be concerned about the financial position, recordkeeping practices, or status of accounts of the program manager.
(g) During the term of any contract with a program manager, the development corporation shall conduct an examination of the program manager and its handling of accounts. The examination shall be conducted at least biennially if the program manager is not otherwise subject to periodic examination by the commissioner of financial institutions, the Federal Deposit Insurance Corporation, or other similar entity.
(4) Existing accounts held by the financial organization shall remain subject to all oversight and reporting requirements established by the development corporation.
If the development corporation terminates a financial organization as a program manager, the development corporation shall take custody of accounts held by the financial organization and shall seek to promptly transfer the accounts to another financial organization that is selected as a program manager and into investment instruments as similar to the original instruments as possible.
(i) The development corporation may enter into contracts for the services of consultants for rendering professional and technical assistance and advice and any other contracts that are necessary and proper for the implementation of the program.
(k) The program manager shall invest all contributions received from investors in securities not limited to legal investments under state laws relating to the investment of trust fund assets by trust companies, including those authorized by article 8 of chapter 412. Contributions shall be used for venture capital investment. Investment may be made in any manner the program deems correct. If no venture capital is available at the time a contribution is made to the program, the program manager may invest the contribution in any manner allowed a regulated investment company until a venture capital investment opportunity occurs. While the program manager should make a best effort to make venture capital investments as defined in section 206M-AA, if no such venture capital investment is available in Hawaii, then the program manager may make venture capital investments outside Hawaii.
(l) The development corporation may adopt any necessary rules under chapter 91.
§206M-CC Limitation of liability. In no case shall the development corporation, officers or employees of the development corporation, or the State be liable for the monetary losses of individuals contributing to the program. In all cases, the program manager shall inform individual contributors of the risk involved in contributing to the program.
Part C. broadband division
§206M-DD Broadband division; established. There is established the broadband division of the Hawaii technology development corporation. The purpose of the division is to provide all Hawaii residents with access to ultra-high speed internet service at affordable prices."
SECTION 2. Chapter 206M, Hawaii Revised Statutes, is amended by adding two new sections to part I to be appropriately designated and to read as follows:
"§206M-EE Hydrogen investment capital special fund. (a) There shall be established the hydrogen investment capital special fund, into which shall be deposited:
(2) For any other purpose deemed necessary to carry out the purposes of section 196-10.
§206M-FF HI growth initiative; report to legislature. The development corporation shall submit a report to the legislature no later than twenty days prior to each regular session on the specific annual outcome achieved through the activities and expenditures of the HI growth initiative."
SECTION 3. Section 206M-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) There is established the Hawaii technology development corporation, which shall be a public body corporate and politic and an instrumentality and agency of the State. The development corporation shall be placed within the department of business, economic development, and tourism for administrative purposes, pursuant to section 26-35. The purpose of the development corporation shall be to facilitate the growth and development of the commercial technology industry in Hawaii. Its duties shall include, but not be limited to:
(1) Developing and encouraging industrial parks as technology innovation centers and developing or assisting with the development of projects within or outside of industrial parks, including participating with the private sector in such development;
(4) Promoting and marketing Hawaii as a site for commercial technology activity; [and]
(5) Providing advice on policy and planning for technology-based economic development[.]; and
(6) Establishing programs to stimulate private capital investment in Hawaii toward investments that promote the welfare of citizens of this State, economic growth, employment, and economic diversification."
SECTION 4. Section 206M-3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
(6) Through its chief executive officer, appoint officers, agents, and employees, prescribe their duties and qualifications, and fix their salaries, without regard to chapter 76;
(14) Procure insurance [against any loss in connection with its property and other assets and operations in amounts and from insurers as it deems desirable;] as may be necessary;
(22) Develop [programs]:
(A) Programs that support start-up and existing technology companies in Hawaii and attract new companies to relocate to or establish operations in Hawaii by assessing the needs of these companies and providing the physical and technical infrastructure to support their operations; and
(B) Specialized programs designed to encourage the development of new products, businesses, and markets;
(28) Provide [advice,] advisory services, technical and marketing assistance, support, and promotion to enterprises in which investments have been made[;] or as may be necessary to carry out the purposes of this chapter;
(32) Coordinate the development corporation's programs with any education and training program;
(35) Enter into agreements or other transactions with any federal, state, or county agency;
(36) Appear in its own behalf before state, county, or federal agencies;
(37) Appoint advisory committees as deemed necessary;
(38) Exercise any other powers of a corporation organized under the laws of the State; and
[(32)] (39) Do any and all things necessary or convenient to carry out its purposes and exercise the powers given and granted in this chapter."
SECTION 5. Chapter 211F, Hawaii Revised Statutes, is repealed.
SECTION 6. All rights, powers, functions, and duties of the Hawaii strategic development corporation and the broadband division of the department of business, economic development, and tourism are transferred to the Hawaii technology development corporation.
SECTION 7. All rules, policies, procedures, guidelines, and other material adopted or developed by the Hawaii strategic development corporation and the broadband division of the department of business, economic development, and tourism to implement provisions of the Hawaii Revised Statutes that are reenacted or made applicable to the Hawaii technology development corporation by this Act shall remain in full force and effect until amended or repealed by the Hawaii technology development corporation pursuant to chapter 91, Hawaii Revised Statutes. In the interim, every reference to the Hawaii strategic development corporation or the board of directors of the Hawaii strategic development corporation or the broadband division or the director of business, economic development, and tourism in those rules, policies, procedures, guidelines, and other material is amended to refer to the Hawaii technology development corporation or the board of directors of the Hawaii technology development corporation, as appropriate.
SECTION 8. All deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the Hawaii strategic development corporation or the broadband division of the department of business, economic development, and tourism, pursuant to the provisions of the Hawaii Revised Statutes that are reenacted or made applicable to the Hawaii technology development corporation by this Act shall remain in full force and effect. Effective July 1, 2019, every reference to the Hawaii strategic development corporation or the board of directors of the Hawaii strategic development corporation or the broadband division or the director of business, economic development, and tourism in those deeds, leases, contracts, loans, agreements, permits, or other documents shall be construed as a reference to the Hawaii technology development corporation or the board of directors of the Hawaii technology development corporation, as appropriate.
SECTION 9. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the Hawaii strategic development corporation and the broadband division of the department of business, economic development, and tourism relating to the functions transferred to the Hawaii technology development corporation shall be transferred with the functions to which they relate.
SECTION 10. In codifying the new parts and sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new parts and sections in this Act.
Hawaii Strategic Development Corporation; Hawaii Technology Development Corporation; Broadband Division; Transfer