Regulates state and county business subsidies.

A BILL FOR AN ACT

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

§ -1 Definitions. As used in this chapter:

"Business subsidy" or "subsidy" means a grant; contribution of personal property, real property, or infrastructure; the principal amount of a loan at rates below those commercially available to the recipient; any reduction or deferral of any tax or any fee; any guarantee of any payment under any loan, lease, or other obligation; or any preferential use of government facilities given to a business by a state or county agency. The term "business subsidy" or "subsidy shall not include:

(1) Financial assistance of less than ;

"Department" means the department of business, economic development, and tourism.

"Director" means the director of business, economic development, and tourism.

"Grantor" means a state or county agency.

"Recipient" means an individual entering into a subsidy agreement with a grantor under this chapter.

§ -2 Public purpose. A business subsidy shall meet a public purpose that may include but not be limited to increasing the tax base of the State. Job retention may only be used as a public purpose in cases where job loss is specific and demonstrable.

§ -3 Criteria. A business subsidy shall not be granted until the department has adopted criteria for awarding business subsidies in accordance with chapter 91. The criteria shall not be adopted on a case-by-case basis.

(b) The criteria shall set specific minimum requirements for recipients to be eligible to receive business subsidies. The criteria shall include a specific wage floor for the wages to be paid for the jobs created. The wage floor may be stated as a specific dollar amount or as a formula that will generate a specific dollar amount. A grantor may deviate from its criteria by documenting in writing the reason for the deviation and attaching a copy of the document to its next annual report to the department.

§ -4 Subsidy agreement. (a) When a recipient enters into a subsidy agreement with the grantor of the subsidy, the subsidy agreement shall include:

(2) A statement of the public purposes for the subsidy;

(5) A statement of why the subsidy is needed;

(b) Business subsidies in the form of grants shall be structured as forgivable loans. For other types of business subsidies, the agreement shall state the fair market value of the subsidy to the recipient, including the value of conveying property at less than a fair market price, or other in-kind benefits to the recipient.

(c) If a business subsidy benefits more than one recipient, the grantor shall assign a proportion of the business subsidy to each recipient that signs a subsidy agreement. The proportion assessed to each recipient shall reflect a reasonable estimate of the recipient's share of the total benefits of the project.

(d) The grantor and each recipient shall both sign the subsidy agreement.

(e) Notwithstanding subsection (a)(6), a recipient may be authorized to move from the jurisdiction where the subsidy is used within the -year period after the benefit date if, after a public hearing, the grantor approves the recipient's request to move.

§ -5 Wage and job goals. The subsidy agreement shall include:

(2) Wage goals for the jobs created or retained.

If the creation or retention of jobs is determined not to be a goal by the grantor, the wage and job goals may be set at zero. The wage and job goals shall contain specific goals to be attained within two years of the benefit date.

§ -6 Public notice and hearing. (a) Before granting a business subsidy that exceeds $ , the grantor shall provide public notice and a hearing on the subsidy. A public hearing and notice shall not be required if a hearing and notice on the subsidy are otherwise required by law.

(b) Public notice of a proposed business subsidy under this chapter shall be published statewide and in addition in the county where the hearing will be held. The notice shall identify the location at which information about the business subsidy, including a summary of the terms of the subsidy, is available. The published notice should be sufficiently conspicuous in size and placement to distinguish the notice from the surrounding text. The grantor shall make the information available in printed paper copies and, if possible, on the internet. The grantor shall provide at least a -day notice for the public hearing. The public notice shall include the date, time, and place of the hearing.

§ -7 Enforcement. (a) The subsidy agreement shall specify the recipient's obligation if the recipient does not fulfill the agreement. At a minimum, the agreement shall require a recipient failing to meet subsidy agreement goals to pay back the assistance plus interest to the grantor. The department shall enforce the provisions of this chapter.

(b) A recipient that fails to meet the terms of a subsidy agreement shall not receive a business subsidy from any grantor for a period of years from the date of failure or until a recipient satisfies its repayment obligation, whichever occurs first.

(c) Before a grantor signs a business subsidy agreement, the grantor shall check with the compilation and summary report required by this chapter to determine if the recipient is eligible to receive a business subsidy.

§ -8 Reports to grantors. (a) A recipient shall provide information regarding goals and results for years after the benefit date or until the goals are met, whichever is later. If the goals are not met, the recipient shall continue to provide information on the subsidy until the subsidy is repaid. The information shall be filed on forms developed by the department. Copies of the completed forms shall be sent to the grantor of the subsidy.

(b) If the recipient does not submit its report, the grantor that provided the subsidy shall mail the recipient a warning within days of the required filing date. If, after days of the postmarked date of the warning, the recipient fails to provide a report, the recipient shall pay to the grantor a penalty of $ for each subsequent day until the report is filed. The maximum penalty shall not exceed

$ .

§ -9 Reports by grantors. (a) All grantors that have awarded business subsidies shall file a report by of each year with the department. The report shall include a list of recipients that did not complete the recipient report required under section -8 and a list of recipients that have not met their job and wage goals within years and the steps being taken to bring them into compliance or to recoup the subsidy.

(b) If the director has not received the report by April 1 from the grantor that is required to report, the director shall issue a warning to the agency. If the director has still not received the report by June 1 of that same year from the grantor that is required to report, then that grantor shall not award any business subsidies until the report has been filed.

(c) The director shall provide information on reporting requirements to state and county agencies.

§ -10 Compilation and summary report. (a) The department shall publish a compilation and summary of the results of the reports for the previous calendar year by

August 1 of each year. The reports of the grantors to the department and the compilation and summary report of the department shall be made available to the public.

(b) The director shall coordinate the production of reports so that useful comparisons across time periods and across grantors can be made. The director may include other information in the report as the director deems necessary to evaluate business subsidies.

§ -11 Rules. The department shall adopt rules pursuant to chapter 91 for the purposes of this chapter."

SECTION 2. This Act shall take effect upon its approval.