Report Title:

Tourism; Administration; Taxes

 

Description:

Increases the number of Hawaii Tourism Authority (HTA) voting members. Establishes the convention center enterprise special fund. Assigns HTA the responsibility for marketing, managing, using, operating, and maintaining the convention center facility. Allows excess TAT revenues to be used for expanding Hawaii business tourism and investing in Hawaii's natural resources. (HB269 HD1)

 

HOUSE OF REPRESENTATIVES

H.B. NO.

269

TWENTY-FIRST LEGISLATURE, 2001

H.D. 1

STATE OF HAWAII

  

 

A BILL FOR AN ACT

 

RELATING TO TOURISM.

 

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

SECTION 1. In 1998, Act 96, Session Laws of Hawaii 1988, was enacted to create the convention center authority for the primary purpose of approving a convention center development plan and supervising the development within the convention center district by a developer pursuant to the approved convention center development plan, including the development of a convention center facility. The convention center authority was also authorized to enter into contracts for the professional management, operation, and maintenance of the convention center facility. Construction of the convention center facility has been completed and a contract for its professional management, operation, and maintenance has been executed by the State. The convention center's authority ceased on June 30, 2000.

The legislature recognizes that the primary intent behind the development of the convention center was to bring new and additional outside money into the state economy. Since the development of the convention center facility was primarily financed by the sale of bonds that would be repaid by the transient accommodations tax, it is the State's policy to link the use of the convention center facility with hotel room bookings. Therefore, the legislature finds that it is appropriate for the State to give first priority booking to out-of-state bookings that would generate revenues for the State.

The legislature further finds that the State should give second priority booking at the convention center facility to corporate meetings, special events, trade shows, consumer shows, entertainment shows, social events, or events catered to the general community; provided that it does not interfere with any potential priority use.

Since the effectiveness of the convention center is to be primarily determined by its ability to generate tourism-related revenues for the State, it should be given the necessary tools to effectively compete against other convention and hotel destinations. The Hawaii convention center should be allowed to operate as a business enterprise and to always maintain an appropriate capital reserve balance for cash flow and capital expenditures related to major repair, replacement, or construction of items at the convention center facility.

The legislature is also concerned by the potential adverse impacts upon State parks or its natural resources that may be caused by the increased level of visitors.

The purpose of this Act is to:

(1) Assign the responsibility to market, operate, manage, and maintain the Hawaii convention center facility to the Hawaii tourism authority;

(2) Establish a Hawaii convention center enterprise special fund; and

(3) Increase the number of voting public members for the Hawaii tourism authority by adding one new voting public member and authorizing the existing non-voting public member to vote.

SECTION 2. Chapter 201B, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

"§201B- Convention center enterprise special fund. (a) There is established in the state treasury the convention center enterprise special fund, into which shall be deposited:

(1) A portion of the revenues from the transient accommodations tax, as provided by section 237D-6.5;

(2) All gross revenues or moneys derived from the operations of the convention center and the food and beverage service;

(3) All of the gross revenues from the parking facilities or from any concession;

(4) All of the gross revenues from the sale of souvenirs, logo items, or any other items offered for purchase at the convention center;

(5) Private contributions, interest, compensation, gross or net revenues, proceeds, or other moneys derived from any source or for any purpose arising from the use of the convention center facility as a commercial enterprise; and

(6) Appropriations by the legislature.

(b) Moneys in the convention center enterprise special fund shall be used by the authority for the payment of any and all debt service relating to the convention center, administrative expenses, any expense arising from any and all marketing, use, operation, maintenance, or improvement of the convention center, including without limitation, the food and beverage service and parking service provided at the convention center facility, the sale of souvenirs, logo items, or other items, and for deposit into the convention center facility reserve special fund for any future major repair, maintenance, and future improvement of the convention center facility as a commercial enterprise or as a world-class facility for conventions, entertainment, or public events.

§201B- Concession or commercial enterprise. The authority shall not be subject to chapter 102 and any and all other requirements of law for competitive bidding for any concession, sponsorship, license agreement, or commercial enterprise executed by or through the authority and related to the tourism-related activities described in section 201B-7, or related to the management or operation of the convention center facility, or as a facility for entertainment or public events.

§201B- Convention center facility reserve special fund. (a) There is established in the state treasury the convention center facility reserve special fund, into which shall be deposited moneys from the convention center enterprise special fund and appropriations by the legislature.

(b) Moneys in the convention center facility reserve special fund shall be used by the authority for any future major repair, maintenance, and improvement of the convention center facility as a world-class facility for conventions, entertainment, or public events."

SECTION 3. Section 201B-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Convention center facility" or "convention center" means:

(1) Any combination of land, buildings, and improvements thereon, acquired or developed by the State of Hawaii, and includes exhibition halls, meeting rooms, a plenary session hall, and support space that reflect a Hawaiian sense of place;

(2) Any other structure or facility required or useful for the operation of a convention center, including but not limited to commercial, office, community service, parking, garage, and other supporting service structures; and

(3) All necessary, useful, and related equipment, furnishings, and appurtenances."

SECTION 4. Section 36-27, Hawaii Revised Statutes, is amended to read as follows:

"§36-27 Transfers from special funds for central service expenses. Except as provided in this section, and notwithstanding any other law to the contrary, from time to time, the director of finance, for the purpose of defraying the prorated estimate of central service expenses of government in relation to all special funds, except the:

(1) Special summer school and intersession fund under section 302A-1310;

(2) School cafeteria special funds of the department of education;

(3) Special funds of the University of Hawaii;

(4) State educational facilities improvement special fund;

(5) Convention center [capital and operations] enterprise special fund under section [206X-10.5;] 201B- ;

(6) Special funds established by section 206E-6;

(7) Housing loan program revenue bond special fund;

(8) Housing project bond special fund;

(9) Aloha Tower fund created by section 206J-17;

(10) Domestic violence prevention special fund under section 321-1.3;

(11) Spouse and child abuse special account under section 346-7.5;

(12) Spouse and child abuse special account under section 601-3.6;

(13) Funds of the employees' retirement system created by section 88-109;

(14) Unemployment compensation fund established under section 383-121;

(15) Hawaii hurricane relief fund established under chapter 431P;

(16) Hawaii health systems corporation special funds;

(17) Boiler and elevator safety revolving fund established under section 397-5.5;

(18) Tourism special fund established under section 210B-11;

(19) Department of commerce and consumer affairs' special funds;

(20) Compliance resolution fund established under section 26-9;

(21) Universal service fund established under chapter 269;

(22) Integrated tax information management systems special fund under section 231-3.2;

(23) Insurance regulation fund under section 431:2-215;

(24) Hawaii tobacco settlement special fund under section 328L-2;

(25) Emergency budget and reserve fund under section 328L-3;

(26) Probation services special fund under section 706-649; and

(27) High technology special fund under section 206M-15.5;

shall deduct five per cent of all receipts of all other special funds, which deduction shall be transferred to the general fund of the State and become general realizations of the State. All officers of the State and other persons having power to allocate or disburse any special funds shall cooperate with the director in effecting these transfers. To determine the proper revenue base upon which the central service assessment is to be calculated, the director shall adopt rules pursuant to chapter 91 for the purpose of suspending or limiting the application of the central service assessment of any fund. No later than twenty days prior to the convening of each regular session of the legislature, the director shall report all central service assessments made during the preceding fiscal year."

SECTION 5. Section 36-30, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Each special fund, except the:

(1) Transportation use special fund established by section 261D-1;

(2) Special summer school and intersession fund under section 302A-1310;

(3) School cafeteria special funds of the department of education;

(4) Special funds of the University of Hawaii;

(5) State educational facilities improvement special fund;

(6) Special funds established by section 206E-6;

(7) Aloha Tower fund created by section 206J-17;

(8) Domestic violence prevention special fund under section 321-1.3;

(9) Spouse and child abuse special account under section 346-7.5;

(10) Spouse and child abuse special account under section 601-3.6;

(11) Funds of the employees' retirement system created by section 88-109;

(12) Unemployment compensation fund established under section 383-121;

(13) Hawaii hurricane relief fund established under chapter 431P;

(14) Convention center [capital and operations] enterprise special fund established under section [206X-10.5;] 201B- ;

(15) Hawaii health systems corporation special funds;

(16) Tourism special fund established under section 201B-11;

(17) Compliance resolution fund established under section 26-9;

(18) Universal service fund established under chapter 269;

(19) Integrated tax information management systems special fund;

(20) Insurance regulation fund under section 431:2-215;

(21) Hawaii tobacco settlement special fund under section 328L-2;

(22) Emergency and budget reserve fund under section 328L-3;

(23) Probation services special fund under section 706-649; and

(24) High technology special fund under section 206M-15.5;

shall be responsible for its pro rata share of the administrative expenses incurred by the department responsible for the operations supported by the special fund concerned."

SECTION 6. Section 201B-2, Hawaii Revised Statutes, is amended to read as follows:

1. By amending subsection (b) to read as follows:

"(b) The authority shall be headed by a board of directors which consists of [ten] twelve public, voting members, [one public, nonvoting member,] one ex officio voting member, and one ex officio nonvoting member; provided that:

(1) [Ten] Twelve public, voting members shall be appointed by the governor as provided in section 26-34, except as otherwise provided by law;

(2) The [ten] twelve public, voting members shall be composed of one representative each from the city and county of Honolulu and the counties of Hawaii, Kauai, and Maui; the remaining public members shall be appointed at-large;

(3) Of the [ten] twelve public, voting members, two shall be appointed by the governor from a list of three names nominated by the president of the senate, and two shall be appointed by the governor from a list of three names nominated by the speaker of the house of representatives;

(4) At least six of the [ten] twelve public, voting members shall have knowledge, experience, and expertise in the area of visitor industry management, marketing, and promotion;

(5) The governor shall make appointments to ensure the fulfillment of all requirements;

(6) The director of business, economic development, and tourism, or a designated representative, shall be an ex officio voting member; and

(7) The director of transportation or a designated representative, shall be an ex officio nonvoting member[; and

(8) The governor shall appoint a public, nonvoting member]."

2. By amending subsection (e) to read as follows:

"(e) [Six] Seven voting members shall constitute a quorum, whose affirmative vote shall be necessary for all actions by the authority. The members shall serve without compensation, but shall be reimbursed for expenses, including traveling expenses, necessary for the performance of their duties."

SECTION 7. Section 201B-3, Hawaii Revised Statutes, is amended to read as follows:

"[[]§201B-3[]] Powers. Except as otherwise limited by this chapter, the board may:

(1) Sue and be sued;

(2) Have a seal and alter the same at pleasure;

(3) Make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter[,]; provided that the authority may enter into contracts and agreements for a period of up to [five] ten years[;] and subject to the availability of funds;

(4) Make and alter bylaws for its organization and internal management;

(5) Adopt rules in accordance with chapter 91 with respect to its projects, operations, properties, and facilities;

(6) Through its executive director represent the authority in communications with the governor and with the legislature;

(7) Through its executive director appoint officers, agents, and employees, prescribe their duties and qualifications, and fix their salaries, without regard to chapters 76, 77, and 78;

(8) Through its executive director purchase supplies, equipment, or furniture;

(9) Through its executive director allocate the space or spaces which are to be occupied by the authority and appropriate staff;

(10) Engage the services of qualified persons to implement the State's tourism marketing plan or portions thereof as determined by the board;

(11) Engage the services of consultants on a contractual basis for rendering professional and technical assistance and advice;

(12) Procure insurance against any loss in connection with its property and other assets and operations in such amounts and from such insurers as it deems desirable;

(13) Contract for[, and] or accept revenues, compensation, proceeds, and gifts or grants in any form from any public agency or any other source[;], including any revenues or proceeds arising from the operation or use of the convention center;

(14) Create a vision and develop a long range plan for tourism in Hawaii, including product development, infrastructure, and diversification issues;

(15) Develop, coordinate, and implement state policies and directions for tourism and related activities taking into account the economic, social, and physical impacts of tourism on the State; provided that the authority shall support the efforts of other state and county departments or agencies to manage, improve, and protect Hawaii's natural environment and areas frequented by visitors;

(16) Develop and implement the state tourism strategic marketing plan, which shall be updated every three years, to promote and market the State as a desirable leisure and business visitor destination;

(17) Have a permanent, strong focus on marketing and promotion;

(18) Conduct market development-related research as necessary;

(19) Coordinate all agencies and advise the private sector in the development of tourism-related activities and resources;

(20) Work to eliminate or reduce barriers to travel in order to provide a positive and competitive business environment, including coordinating with the department of transportation on issues affecting airlines and air route development;

(21) Market and promote sports-related activities and events;

(22) Coordinate the development of new products with the public and private sectors, including the development of sports, culture, health, education, business, and eco-tourism;

(23) Establish a public information and educational program to inform the public of tourism and tourism-related problems;

(24) Encourage the development of tourism educational, training, and career counseling programs;

(25) Establish a program to monitor, investigate, and respond to complaints about problems resulting directly or indirectly from the tourism industry and taking appropriate action as necessary; [and]

(26) Do any and all things necessary to carry out its purposes and exercise the powers given and granted in this chapter[.];

(27) Set and collect rents, fees, charges, or other payments for the lease, use, occupancy, or disposition of the convention center facility without regard to chapters 91 and 92;

(28) Notwithstanding the provisions of chapter 171, acquire, lease as lessee or lessor, own, rent, hold, and dispose of real and personal property in the exercise of its powers and the performance of its duties under this chapter; and

(29) Acquire by purchase, lease, or otherwise, and develop, construct, operate, own, manage, repair, reconstruct, enlarge, or otherwise effectuate, either directly or through developers, a convention center facility.

The board shall have the authority and responsibility to adopt rules consistent with this chapter, governing the procurement, management, control, and disposal of any and all goods, services, and construction. All rules shall be adopted in accordance with chapter 91; provided that the board shall have the power to issue interim rules by procurement directives, which shall be exempt from the public notice, public hearing, and gubernatorial approval requirements of chapter 91."

SECTION 8. Section 201B-7, Hawaii Revised Statutes, is amended to read as follows:

"§201B-7 Tourism-related activities. (a) The authority may enter into contracts and agreements that include the following:

(1) Tourism promotion, marketing, and development;

(2) Market development-related research;

(3) Product development and diversification issues;

(4) Promotion, development, and coordination of sports-related activities and events;

(5) Promotion of Hawaii, through a coordinated statewide effort, as a place to do business, including high technology business and as a business destination;

(6) Reduction of barriers to travel;

(7) Tourism public information and educational programs;

(8) Programs to monitor and investigate complaints about the problems resulting from the tourism industry in the State; [and]

(9) Market, manage, use, operate, or maintain the convention center facility including the purchase or sale of goods or services, logo items, concessions, sponsorships, and license agreements, or any use of the convention center facility as a commercial enterprise and as a place for business meetings, event, functions, conventions, or public event; and

(10) Support the efforts of other state and county departments and agencies to manage, improve, and protect Hawaii's natural environment and areas frequented by visitors;

[(9)] (11) Any and all other activities necessary to carry out the intent of this chapter[;

provided that for the purposes of continuity, the Hawaii Visitors and Convention Bureau shall be the designated agency to conduct the marketing and promotion of the State until the end of fiscal year 1998-1999 or until a date specified by the board].

(b) The authority staff [shall be responsible for] may be delegated by the authority the responsibility for soliciting, awarding, and executing contracts, and monitoring and facilitating any and all functions developed in accordance with subsection (a)."

SECTION 9. Section 237D-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is levied and shall be assessed and collected each month a tax of [:

(1) Five per cent for the period beginning on January 1, 1987, to June 30, 1994;

(2) Six per cent for the period beginning July 1, 1994, to December 31, 1998; and

(3)] 7.25 per cent for the period beginning January 1, 1999, and thereafter[;] on the gross rental or gross

rental proceeds derived from furnishing transient accommodations."

SECTION 10. Section 237D-6.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Beginning on January 1, 1999[[],[]] revenues collected under this chapter shall be distributed as follows:

(1) 17.3 per cent of the revenues collected under this chapter shall be deposited into the convention center [capital and operations] enterprise special fund established under section [206X-10.5;] 201B- ;

(2) 37.9 per cent of the revenues collected under this

chapter shall be deposited into the tourism special fund established under section 201B-11;

(3) 44.8 per cent of the revenues collected under this chapter shall be transferred as follows:

(A) Kauai county shall receive 14.5 per cent[,];

(B) Hawaii county shall receive 18.6 per cent[, city];

(C) City and county of Honolulu shall receive 44.1 per cent[,]; and

(D) Maui county shall receive 22.8 per cent.

All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection, and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection."

SECTION 11. If the amount of revenues collected under section 237D-6.5(b), Hawaii Revised Statutes, and deposited into the tourism special fund established under section 201B-11 exceeds the amount appropriated to the Hawaii tourism authority and the department of business, economic development, and tourism's visitor research program for fiscal year 2001-2002 and fiscal year 2002-2003, there is appropriated out of the tourism special fund the excess amount to the Hawaii tourism authority for the following purposes:

(1) Fifty per cent to expand Hawaii business tourism, which may include marketing business development, including technology business development programs, and shall focus on promoting Hawaii as a place to do business and to diversify Hawaii's economy as a business destination, including the convention center facility as a business destination for business meetings, events, functions, or conventions; and

(2) Fifty per cent to invest in Hawaii's natural environment, which may include:

(A) Management for the purpose of protecting valuable natural resource or open space;

(B) Improvements or actions within the conservation district to help protect Hawaii's natural resources;

(C) Public improvements in areas frequented by visitors; and

(D) Other actions necessary to help protect and enhance Hawaii's natural environment.

SECTION 12. There is appropriated out of the tourism special fund established by this Act the sum of $ or so much thereof as may be necessary for fiscal year 2001-2002 and the sum of$ or so much thereof as may be necessary for fiscal year 2002-2003 for the purposes of the tourism special fund.

The sums appropriated shall be expended by the Hawaii tourism authority for the purposes of this Act.

SECTION 13. There is appropriated out of the convention center facility reserve special fund established by this Act the sum of $2,000,000 or so much thereof as may be necessary for fiscal year 2001-2002 and the sum of $4,000,000 or so much thereof as may be necessary for fiscal year 2002-2003 for the purposes of the convention center facility reserve special fund.

The sums appropriated shall be expended by the Hawaii tourism authority for the purposes of this Act.

SECTION 14. There is appropriated out of the convention center enterprise special fund the sum of $42,800,000 or so much thereof as may be necessary for fiscal year 2001-2002 and the sum of $42,400,000 or so much thereof as may be necessary for fiscal year 2002-2003 for the purposes of the convention center enterprise special fund; provided that $2,000,000 for fiscal year 2001-2002 and $2,000,000 for fiscal year 2002-2003 shall be deposited into the convention center facility reserve special fund for use to pay for any future major repair, maintenance, and improvement of the convention center facility as a world class facility for conventions, entertainment, or public events.

The sums appropriated shall be expended by the Hawaii tourism authority for the purposes of this Act.

SECTION 15. All deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the convention center authority pursuant to the provisions of the Hawaii Revised Statutes, which are reenacted or made applicable by reference or through the implementation of the powers conferred upon the Hawaii tourism authority by this Act, shall remain in full force and effect. Effective June 30, 2000, every reference to the convention center authority therein shall be construed as a reference to the Hawaii tourism authority.

SECTION 16. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 17. This Act shall take effect upon its approval, except that section 15 shall take effect retroactive to

June 30, 2000; provided that the amendments made to section 36-27, Hawaii Revised Statutes, shall not be repealed when that section is reenacted on July 1, 2003, by section 9 of Act 142, Session Laws of Hawaii 1998.