Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committees on Agriculture and Economic Development and Technology, to which was referred S.B. No. 2228 entitled:

beg leave to report as follows:

The purpose of this measure is to authorize the issuance of special purpose revenue bonds for the purchase of a sugar and molasses terminal facility at Nawiliwili, Kauai.

Testimony in support of the measure was received from the Agribusiness Development Corporation, the Chairman of the Kauai County Council, the Hawaii Agriculture Research Center, the Hawaii Farm Bureau, the Kauai County Farm Bureau, Gay and Robinson, Inc., and numerous businesses from the island of Kauai. The Department of Budget and Finance submitted concerns over the whether a sugar and molasses terminal facility qualifies as a "processing enterprise" under Part IV, Chapter 39A, Hawaii Revised Statutes, and whether the prohibition under federal tax law against refinancing taxable debt into tax-exempt debt applies.

Your Committees find that the sugar and molasses terminal facility at Nawiliwili on the island of Kauai was constructed around 1950, and prior to 1994, provided receiving, storing, and shipping services for both sugar and molasses for all five producers on the island. With the demise of four of these operations by 2000, Gay & Robinson, Inc., is the only remaining producer left to purchase the terminal facility.

Gay & Robinson, Inc., is committed to the sugar industry and is increasing its investment by farming an additional 4,300 acres of state-owned lands formerly leased to Kekaha Sugar. The company has hired forty additional employees and will hire more when the entire 4,300 acres are fully cultivated. Gay & Robinson, Inc., now employs over 300 full-time employees and provides subsidized housing for 350 current and retired employees. By remaining in business and hiring people during these depressed times, the company is contributing significantly to the economy of the island of Kauai and the State.

Your Committees have amended the measure by:

Your Committees believe that assisting Gay and Robinson Inc., would benefit the people of the island of Kauai by maintaining a significant economic engine on that island.

As affirmed by the records of votes of the members of your Committees on Agriculture and Economic Development and Technology that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2228, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2228, S.D. 1, and be referred to the Committee on Ways and Means.