STAND. COM. REP. NO. 3020

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 2959
                                        H.D. 3
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Economic Development, to which was
referred H.B. No. 2959, H.D. 3, entitled: 

     "A BILL FOR AN ACT RELATING TO THE ENTERTAINMENT INDUSTRY,"

begs leave to report as follows:

     The purpose of this measure is to assist Hawaii's television
and film industry to promote Hawaii to the world by:

     (1)  Establishing a Hawaii television and film development
          loan guarantee program, to be administered by a board
          attached to the department of business, economic
          development, and tourism;

     (2)  Establishing a Hawaii television and film development
          special fund to provide grants and loans for eligible
          Hawaii projects;

     (3)  Establishing the procedures and safeguards for the
          program;

     (4)  Changing from four per cent to an unspecified
          percentage the tax credit for costs incurred in the
          State in production of motion picture or television
          films; and


 
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     (5)  Appropriating from the tourism special fund any amounts
          from the transient accommodations tax revenues in
          excess of $60,000,000.

     Testimony in favor of this measure was submitted by the
Honolulu Film Office.  The Hawaii Tourism Authority, Hawaii Hotel
Association, Maui Hotel Association, and Outrigger Enterprises,
Inc., presented testimony in opposition.  The Department of
Business, Economic Development, and Tourism, Department of Budget
and Finance, Department of Taxation, Mayor of the County of
Hawaii, County of Kauai Office of Economic Development, County of
Maui Office of Economic Development, Tax Foundation of Hawaii,
and two individuals submitted comments. 

     Your Committee finds that while there is broad consensus for
the importance of supporting the film and television industry in
Hawaii, there is a considerable difference of opinion as how best
to do so.  Your Committee has heard particular concerns with
regards to the proposed use of a portion of the transient
accommodations tax that is now earmarked for the Hawaii tourism
authority.  Your Committee believes that television and film
productions that use Hawaii locations can be an effective
marketing tool for tourism, but also acknowledges the concerns of
the tourism industry in implementing such a policy.

     Your Committee has amended this measure to:

     (1)  Amend the purpose section to establish a loan guarantee
          program, and encourage the Hawaii tourism authority to
          provide funding for these entertainment projects that
          promote Hawaii to the world;

     (2)  Add a statutory findings and purpose section to the new
          part establishing the loan guarantee program;

     (3)  Clarify that an "eligible Hawaii project" means that
          seventy-five per cent of the budget for production
          costs of the project is used for purchases or leases of
          goods or services from Hawaii vendors;

     (4)  Establish the program under the authority of the
          department of business, economic development, and
          tourism and its film industry branch;

     (5)  Clarify that the guaranteed amount shall not exceed
          ninety per cent of the total qualified amount, or
          $900,000;


 
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     (6)  Delete five proposed new sections: Hawaii television
          and film development board, Hawaii television and film
          development special fund, indemnity requirement,
          violation and penalty, and limitations in program;

     (7)  Retain the current tax credit of four per cent of the
          costs for motion picture and television film
          productions and deleting those amendments from the
          measure;

     (8)  Delete the appropriation section; and

     (9)  Make technical amendments.

     As affirmed by the record of votes of the members of your
Committee on Economic Development that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 2959, H.D. 3, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B.
No. 2959, H.D. 3, S.D. 1, and be referred to the Committee on
Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development,



                                   ______________________________
                                   LORRAINE R. INOUYE, Chair

 
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