Establishes the Economic Diversification Authority.

A BILL FOR AN ACT

SECTION 1. Over the years, the economy of Hawaii has relied on just a few industries. In recent decades, tourism has been the main engine of economic growth. Economic diversity is essential for the sustained and healthy development of the State.

A number of separate entities have been established to promote economic growth: the Hawaii community development authority, Aloha Tower development corporation, high technology development corporation, and Hawaii strategic development corporation. These bodies have demonstrated varying levels of success, and a clear need exists for improvement in strategic planning, efficiency of operations, and coordination in the State's efforts at economic diversification. A new economic diversification authority would combine the functions and activities of these separate organizations and better use the resources available in the State's public and private sectors.

The purpose of this Act is to establish the economic diversification authority.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

§     -1  Definitions. As used in this chapter:

"Agency" means any agency, department, authority, board, commission, the University of Hawaii, or any other unit of the State or its political subdivisions.

"Authority" means the economic diversification authority, and any successor thereto.

"Board" means the board of directors of the authority.

"Executive director" means the executive director of the authority.

"Public agency" means any office, department, board, commission, bureau, division, public corporation agency, or instrumentality of the federal, state, or county government.

§     -2  Economic diversification authority; establishment; board; staff. (a) There is established the economic diversification authority, which shall be a body corporate and a public instrumentality of the State. The authority shall be placed within the department of business, economic development, and tourism for administrative purposes only.

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

(c) The public members shall be appointed for terms of four years, except that the terms of the members first appointed shall be for two and four years, respectively, as designated by the governor, president of the senate, speaker of the house of representatives, majority leader of the senate, minority leader of the senate, majority leader of the house of representatives, and minority leader of the house of representatives at the time of appointment. Each public member shall hold office until the member's successor is appointed and qualified. Section 26-34 shall be applicable insofar as it relates to the number of terms and consecutive number of years a member may serve on the board.

(d) The board shall elect a chairperson from among the voting members.

(e) Six 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.

(f) The board shall appoint an executive director, exempt from chapter 76, who shall oversee the authority staff, and shall be compensated at a salary level set by the governor.

(g) The authority may employ persons not subject to chapters 76 and 78 to perform and execute the functions of the authority.

§     -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;

§     -4 Meetings of the board. (a) The meetings of the board shall be open to the public as provided in section 92-3, except that when it is necessary for the board to receive information that is proprietary to a particular enterprise or the disclosure of which might be harmful to the business interest of the enterprise, the board may enter into an executive meeting that is closed to the public.

(b) The board shall be subject to the procedural requirements of section 92-4, and this authorization shall be in addition to the exceptions listed in section 92-5, to enable the authority board to respect the proprietary requirements of enterprises with which it has business dealings.

§     -5 Exemption of economic diversification authority from administrative supervision of boards and commissions. Notwithstanding any law to the contrary, the authority shall be exempt from section 26-35, with the exception of section 26-35(2), (3), (7), and (8).

§     -6 Promotional and marketing functions of the authority. The authority shall disseminate information developed for or by the authority pertaining to economic development and diversification to assist present industry in the State, attract new industry and investments to the State, and assist new and emerging industry with good growth potential or prospects in jobs, exports, and new products. The economic and industrial promotional activities of the authority may include the use of literature, advertising, demonstrations, displays, market testing, lectures, travel, motion picture and slide films, and such other promotional and publicity devices as may be appropriate.

§     -7 Exemption of authority from taxation. All revenues and receipts derived by the authority from any project or a project agreement or other agreement pertaining thereto shall be exempt from all state taxation. Any right, title, and interest of the authority in any project shall also be exempt from all state taxation. Except as otherwise provided by law, the interest of a qualified person or other user of a project or a project agreement or other agreements related to a project shall not be exempt from taxation to a greater extent than it would be if the costs of the project were directly financed by the qualified person or user.

§     -8 Assistance by state and county agencies. Any state or county agency may render services upon request of the authority.

§     -9 Declaration of public function, purpose, and necessity. The powers and functions granted to and exercised by the economic diversification authority under this chapter are declared to be public and governmental functions, exercised for a public purpose, and matters of public necessity.

§     -10 Court proceedings; preferences; venue. (a) Any action or proceeding to which the authority, the State, or the county may be a party, in which any question arises as to the validity of this chapter, shall be preferred over all other civil cases, except election cases, in the circuit court of the circuit where the case or controversy arises, and shall be heard and determined in preference to all other civil cases pending therein, except election cases, irrespective of position on the calendar.

(b) Upon application of counsel to the authority, the same preference shall be granted in any action or proceeding questioning the validity of this chapter in which the authority may be allowed to intervene.

(c) Any action or proceeding to which the authority, the State, or the county may be party, in which any question arises as to the validity of this chapter or any portion of this chapter, or any action of the authority may be filed in the circuit court of the circuit where the case or controversy arises, which court is hereby vested with original jurisdiction over the action.

(d) Notwithstanding any provision of law to the contrary, declaratory relief from the circuit court may be obtained for any action.

(e) Any party aggrieved by the decision of the circuit court may appeal in accordance with part I of chapter 641, and the appeal shall be given priority.

§     -11 Annual report. The authority shall submit a complete and detailed report of its activities, expenditures, and results to the governor and the legislature at least twenty days prior to the convening of each regular session of the legislature.

§     -15 Establishment of out-of-state offices; purposes. The authority may establish and operate offices in out-of-state locations, including foreign nations, to effectuate the following purposes:

§     -16 Out-of-state offices; powers. The authority, subject to the approval of the director of budget and finance, shall have the following general powers to operate out-of-state offices established:

§     -17 Out-of-state offices; rules. The authority may adopt rules in accordance with chapter 91 for the purposes of this chapter.

§     -18 Out-of-state offices; annual report. The authority shall submit an annual report to the legislature on the operations of its out-of-state offices. For each out-of-state office, the report shall describe and include, but not be limited to:

§     -19 Out-of-state offices; exemptions. The authority is authorized to hire employees necessary to staff its out-of-state offices subject to chapter 76 and legislative appropriations.

The authority may also appoint such other employees exempt from chapter 76 as may be necessary to administer the affairs of its out-of-state offices. The initial appointment shall not exceed three years, during which time the department shall submit to the legislature a request for approval prior to continuation of the position. The authority shall set the duties, responsibilities, salaries, holidays, vacations, leaves, hours of work, and working conditions for these employees.

Subject to the approval of the director of budget and finance, the authority may be exempted from the following state laws only to the extent necessary for the conduct of its business in operating out-of-state offices:

All moneys necessary for the establishment and operation of out-of-state offices shall be allocated by the legislature through appropriations out of the state general fund. The authority shall include in its budgetary request for each upcoming fiscal period the amounts necessary to effectuate the purposes of this section.

§     -20 Economic diversification plan; measures of effectiveness. (a) The authority shall be responsible for developing a strategic economic diversification plan that shall be updated at least every three years and includes the following:

The authority shall also develop and include in the plan, goals and objectives for marketing the State to the high technology industry as well as for integrating marketing objectives with existing and potential state telecommunications and information resources in the public and private sectors. In addition, the authority shall coordinate the requirements for and availability of the State's existing and potential telecommunications and information resources with the department of accounting and general services.

(b) In accordance with subsection (a), the authority shall be responsible for developing measures of effectiveness to assess the overall benefits and effectiveness of the economic diversification plan and include documentation of the directly attributable benefits of the plan to the following:

(1) Hawaii's high technology industry;

(2) Growth of community-based economic development;

(3) Development of energy resources;

(4) Employment in Hawaii; and

(5) State taxes.

§     -21 Activities related to economic diversification. (a) The authority may enter into contracts and agreements that include the following:

(b) The authority staff shall be responsible for monitoring and facilitating any and all functions developed in accordance with subsection (a).

§     -25 Development of markets for recycled materials. The authority, to the extent possible, and with the assistance of the office of solid waste management, shall coordinate state efforts to develop markets for recycled materials. The authority shall integrate this activity with its other programs, specifically those programs relating to business development and energy. The authority shall coordinate market activities with the counties and clarify their respective roles and responsibilities.

§     -26 Advisory committees. (a) The executive director may form advisory committees to assist in the formulation of recommendations concerning the development of markets for recycled materials. The recommendations shall address the removal of impediments to, as well as the establishment of incentives for, the use of recycled materials by businesses or energy producers to expand markets for recyclable materials.

(b) At the discretion of the executive director, committee members may include, but need not be limited to:

§     -27 Recycling; studies. The executive director may conduct studies necessary to prepare recommendations on the development of markets for recycled materials.

§     -28 Recycling; report. The executive director shall incorporate the activities of the past year and any recommendations for specific actions to develop markets for recycled materials in the authority's annual report.

§     -29 Recycling; legislation and rules. The authority, with the assistance of the office of solid waste management, shall coordinate the following activities, as necessary, to develop markets for recycled materials:

It is the intent of the legislature that implementation of the authority's recommendations be expedited.

§     -30 Clean Hawaii fund established. (a) There is established within the state treasury a special fund to be known as the clean Hawaii fund, which shall be administered and used by the authority to market and promote the development of local processing and manufacturing industries for collected recycled materials. All moneys derived from the following sources to market and promote the development of local processing and manufacturing industries for collected recycled materials shall be deposited into the fund:

(b) The authority may use moneys in the clean Hawaii fund to:

(c) The executive director may execute contracts and adopt rules pursuant to chapter 91 to implement the purposes of the clean Hawaii fund.

§     -35 State program for energy planning and conservation. The authority shall develop a state program for energy planning and conservation. The program shall consist of short- and long-range planning for the development and promulgation of methods to encourage voluntary conservation of gasoline, diesel oil, natural gas, propane, heating oils, other fuels, and electrical energy, and efficient development of new or alternative sources of such fuels and energy. The information resulting from such methods is to be disseminated to the people of Hawaii through all forms of mass communication media, public and private schools, private and civic organizations, and all other appropriate means. Public information offices of other state and county agencies may be called upon for assistance in the development of such program."

SECTION 3. Section 26-18, Hawaii Revised Statutes, is amended to read as follows:

"§26-18 Department of business, economic development, and tourism. (a) The department of business, economic development, and tourism shall be headed by a single executive to be known as the director of business, economic development, and tourism.

The department shall undertake statewide business and economic development activities, [undertake energy development and management,] provide economic research and analysis, and plan for the use of Hawaii's ocean resources[, and encourage the development and promotion of industry and international commerce] through programs established by law.

(b) The following are placed in the department of business, economic development, and tourism for administrative purposes as defined by section 26-35: [Aloha Tower development corporation, Hawaii community development authority, high technology development corporation,] land use commission, natural energy laboratory of Hawaii authority, the housing and community development corporation of Hawaii, and any other boards and commissions as shall be provided by law.

The department of business, economic development, and tourism shall be empowered to establish, modify, or abolish statistical boundaries for cities, towns, or villages in the State and shall publish, as expeditiously as possible, an up-to-date list of cities, towns, and villages after changes to statistical boundaries have been made."

SECTION 4. Section 201-3, Hawaii Revised Statutes, is amended to read as follows:

"§201-3 Specific research and promotional functions of the department. Without prejudice to its general functions and duties, the department of business, economic development, and tourism shall have specific functions in the following areas:

The department shall be the central agency to coordinate film permit activities in the State."

SECTION 5. Section 206E-1, Hawaii Revised Statutes, is amended to read as follows:

"§206E-1 Findings and purpose. The legislature finds that many areas of the State are substantially undeveloped, blighted, or economically depressed, and are or are potentially in need of renewal, renovation, or improvement to alleviate such conditions as dilapidation, deterioration, age, and other such factors or conditions which make such areas an economic or social liability.

The legislature further finds that there exists within the State vast, unmet community development needs. These include, but are not limited to, a lack of suitable affordable housing; insufficient commercial and industrial facilities for rent; residential areas which do not have facilities necessary for basic [liveability,] livability, such as parks and open space; and areas which are planned for extensive land allocation to one, rather than mixed uses.

It is further determined that the lack of planning and coordination in such areas has given rise to these community development needs and that existing laws and public and private mechanisms have either proven incapable or inadequate to facilitate timely redevelopment and renewal.

The legislature finds that [a new and comprehensive authority for community development must be created] the economic diversification authority will be able to join the strengths of private enterprise, public development and regulation into a new form capable of long-range planning and implementation of improved community development. [The purpose of this chapter is to establish such a mechanism in the Hawaii community development authority, a public entity which] Accordingly, the economic diversification authority shall determine community development programs and cooperate with private enterprise and the various components of federal, state, and county governments in bringing plans to fruition. For such areas designated as community development districts, the legislature believes that the planning and implementation program of the [Hawaii community development authority] economic diversification authority will result in communities which serve the highest needs and aspirations of Hawaii's people.

The legislature finds that the [creation] establishment of the [Hawaii community development authority,] economic diversification authority, the [establishment] creation of community development districts, and the issuance of bonds pursuant to this chapter to finance public facilities serve the public interest and are matters of statewide concern."

SECTION 6. Section 206E-2, Hawaii Revised Statutes, is amended by amending the definition of "authority" to read:

"(1) "Authority" means the [Hawaii community development authority established by section 206E-3.] economic diversification authority."

SECTION 7. Section 206E-101, Hawaii Revised Statutes, is amended by amending the definition of "authority" to read:

""Authority" means the [Hawaii community development authority.] economic diversification authority."

SECTION 8. Section 206E-191, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The [Hawaii community development authority] economic diversification authority shall be the designated agency of the State to implement this part."

SECTION 9. Section 206J-1, Hawaii Revised Statutes, is amended to read as follows:

"§206J-1 Findings and purpose. The legislature finds that the area in downtown Honolulu on the waterfront, including the Hale Awa Ku Moku Building and Irwin Memorial Park, hereinafter called the Aloha Tower complex, is one of the most valuable properties in downtown Honolulu and that certain portions of this area should be redeveloped, renovated, or improved to better serve the economic, maritime, and recreational needs of the people of Hawaii.

The legislature further finds that the Aloha Tower complex still serves a vital maritime function that must be maintained to insure adequacy and viability for existing and future maritime activities.

The purpose of this chapter is to [establish a new public body corporate and politic, public instrumentality, and agency of the State for the purpose of] designate the economic diversification authority as the state entity responsible for undertaking the redevelopment of the Aloha Tower complex to strengthen the international economic base of the community in trade activities, to enhance the beautification of the waterfront, and in conjunction with the department of transportation, to better serve modern maritime uses, and to provide for public access and use of the waterfront property. Properly developed, the Aloha Tower complex will further serve as a stimulant to the commercial activities of the downtown business community and help transform the waterfront into a "people place."

The legislature finds and determines that the purpose of this chapter is in the public interest and constitutes a valid public purpose."

SECTION 10. Section 206J-2, Hawaii Revised Statutes, is amended as follows:

1. By adding a new definition to be appropriately inserted and to read:

""Authority" means the economic diversification authority, and any successor thereto."

2. By amending the definitions "boards", "bonds", "project", "project cost", and "qualified person" to read:

""Board" means the board of directors of the [development corporation] authority [established in section 206J-4, and any successor thereto].

"Bonds" means revenue bonds, special facilities revenue bonds, notes, or other instruments of indebtedness of the [development corporation] authority issued under this chapter and shall include refunding bonds.

"Project" means an undertaking of work or improvement of public or private real or personal property or any interest therein, developed, acquired, constructed, reconstructed, rehabilitated, improved, altered, or repaired by the [development corporation,] authority, by itself or in conjunction with qualified persons, and including public facilities and, any law to the contrary notwithstanding, facilities for and functionally related and subordinate to maritime purposes.

"Project cost" means the total cost in carrying out all undertakings that the [development corporation] authority deems reasonable and necessary for the development of a project, including but not limited to the cost of studies, surveys, plans, and specifications, architectural, design, engineering, or any other special related services; the cost of site preparation and development, demolition, construction, reconstruction, rehabilitation, and improvement; the cost of financing such project, including interest on bonds issued to finance such project from the date thereof to the estimated date of completion of such project as determined by the board; the cost of an allocable portion of the administrative and operating expenses of the [development corporation] authority related to the development of such project; and the cost of any indemnity and surety bonds, premiums on policies of insurance, legal fees, and fees and expenses of trustees, depositories, and paying agents for the bonds; all as the [development corporation] authority shall deem necessary.

"Qualified person" means any individual, partnership, corporation, or any public agency, possessing the competence, expertise, experience, and resources, including financial, personnel, and tangible resources, required for the purposes of the project and such other qualifications as may be deemed desirable by the [development corporation] authority in administering this chapter."

3. By deleting the definition "development corporation."

[""Development corporation" means the Aloha Tower Development Corporation established by section 206J-4."]

SECTION 11. Section 206J-5, Hawaii Revised Statutes, is amended to read as follows:

"§206J-5 Powers; generally. (a) The [development corporation] authority shall have all the powers necessary to carry out its purposes, including the following powers:

(b) The [development corporation] authority shall impose, prescribe, and collect rates, rentals, fees, or charges for the lease and use and services of its projects at least sufficient to pay the costs of operation, maintenance and repair, if any, of its projects and the required payments of the principal of and interest on all bonds issued to finance its projects. Notwithstanding anything to the contrary contained in this section, the [development corporation] authority may take into account any project costs supplied by qualified persons in calculating such rates, rentals, fees, or charges, to the extent that if the qualified persons selected by the [development corporation] authority is willing to underwrite the entire or substantially all of the costs of development and construction of that project, the [development corporation] authority is empowered to negotiate nominal rentals."

SECTION 12. Section 206J-6, Hawaii Revised Statutes, is amended to read as follows:

"§206J-6 Limitations on the powers of the [development corporation.] authority. (a) The [development corporation] authority shall not sell any fast or submerged lands of the Aloha Tower complex as established by this chapter.

(b) The [development corporation] authority shall preserve the Aloha Tower as an historical monument and shall not sell, remove, demolish, deface, or alter the structure in any reasonable degree to lessen its historical value to the community. However, and notwithstanding any other law to the contrary, repairs, maintenance, relocation of pier platforms, or any essential reconstruction necessary for the preservation of the Aloha Tower as an historical monument shall be permissible.

(c) Irwin Memorial Park shall be retained as a public park subject to the reservations and conditions set forth in the deed of Helene Irwin Fagan to the Territory of Hawaii.

(d) The [development corporation] authority or its lessees shall not exercise any jurisdiction over the provided replacement facilities located within the Aloha Tower complex required for necessary maritime purposes and activities (hereinafter "maritime facilities"). Jurisdiction over any such replacement facilities shall be in the department of transportation. Facilities functionally related to maritime purposes and the purposes outlined in the development plan for the Aloha Tower complex, such as hotel facilities for maritime passengers and waterfront visitors, concession facilities adjacent to maritime terminal facilities, public parking facilities which are situated on property not currently under the jurisdiction of the department of transportation, and commercial, retail, residential, and office facilities may be under the jurisdiction of the [development corporation] authority or its lessees."

SECTION 13. Section 206J-7, Hawaii Revised Statutes, is amended to read as follows:

"§206J-7 Development rules. The [development corporation] authority shall adopt rules under chapter 91 to be followed during the course of the development of the Aloha Tower complex, which are to be known as development rules in connection with health, safety, building, planning, zoning, and land use, which, upon final adoption of a development plan for the Aloha Tower complex, shall supersede all other inconsistent ordinances and rules relating to the use, zoning, planning, and development of land and construction thereon within the Aloha Tower complex. Rules adopted under this section shall be adopted under chapter 91 and shall follow existing law, rules, ordinances, and regulations as closely as is consistent with standards meeting minimum requirements of good design, pleasant amenities, health, safety, and coordinated development. The rules shall also insure that necessary maritime activities are not impaired."

SECTION 14. Section 206J-8, Hawaii Revised Statutes, is amended to read as follows:

"§206J-8 Use of public lands. Without regard to chapter 171, the governor may set aside or any department or agency of the State may lease applicable portions of the area designated as the Aloha Tower complex to the [development corporation] authority for the purpose specified in this chapter; provided that such setting aside would not impair any covenant between the State or any department or board thereof and holders of revenue bonds issued by the State or such department or board, or the [development corporation] authority may lease applicable portions of the Aloha Tower complex from the department of transportation. The [development corporation] authority shall annually reimburse to the department of transportation any losses in revenues caused by any action of the [development corporation.] authority. The [development corporation] authority shall provide replacement facilities for maritime activities at no cost to the department of transportation."

SECTION 15. Section 206J-9, Hawaii Revised Statutes, is amended to read as follows:

"§206J-9 Construction contracts. The [development corporation] authority shall award construction contracts in conformity with chapter 103D and this chapter."

SECTION 16. Section 206J-10, Hawaii Revised Statutes, is amended to read as follows:

"§206J-10 Public projects. Any project or activity of any public agency of the State in the Aloha Tower complex shall be constructed, renovated, or improved in consultation with the [development corporation] authority and the department of transportation."

SECTION 17. Section 206J-11, Hawaii Revised Statutes, is amended to read as follows:

"§206J-11 Lease of projects. The [development corporation] authority may lease without public auction, for a term not exceeding sixty-five years, all or any portion of the real, personal, or mixed property constituting a project under its jurisdiction as provided herein to any qualified person, upon such terms and conditions as may be approved by the board, if the board finds that the lease conforms with the development plan for the Aloha Tower complex. Notwithstanding any other provision to the contrary, the [development corporation] authority shall establish requirements and conditions relating to the terms of lease and the qualifications of any person to apply for such lease."

SECTION 18. Section 206J-12, Hawaii Revised Statutes, is amended to read as follows:

"§206J-12 Bonds; bond anticipation notes. (a) The [development corporation,] authority, with the approval of the governor, may issue bonds in such amounts as authorized from time to time by law and as deemed advisable for any of its corporate purposes. The principal of, premium, if any, and interest on such bonds shall be payable, subject to the prior payment to the harbor special fund for the loss of revenues or incurrence of costs and expenses because of any action taken by the [development corporation] authority or of any rent payable to the department of transportation for the lease of properties within the Aloha Tower complex:

All revenue bonds authorized by this section shall be issued pursuant to part III of chapter 39, except as provided in this chapter. The bonds shall be secured by a pledge of such moneys and may be additionally secured by a mortgage of any project or other property of the [development corporation] authority to the extent of its interest therein. Neither the board members nor any person executing the bonds shall be liable personally on the bonds by reason of the issuance thereof.

(b) Bonds issued pursuant to this chapter may be in one or more issues and in one or more series within an issue and shall be authorized pursuant to resolution of the board. The bonds shall be dated, may bear interest at such rate or rates payable at such time or times as the [corporation] authority may determine with the approval of the governor, except for deeply discounted bonds which are subject to redemption or retirement at the accreted value thereof; provided that the discounted value of such bonds shall not exceed ten per cent of issue and no such bond shall be issued without prior approval of the director of finance and the governor, shall mature at such time or times not exceeding forty years from their date or dates, shall have such rank or priority, and may be made redeemable before maturity at the option of the [development corporation,] authority, the holders, or either, at such price or prices and under such terms and conditions, all as may be determined by the [development corporation.] authority. The [development corporation] authority shall determine the form of the bonds, including any interest coupons to be attached thereto, and the manner of execution of the bonds, and shall fix the denomination or denominations of the bonds and, subject to the approval of the state director of finance, the place or places of payment of principal and interest, which may be at any bank or trust company approved by the state director of finance within or without the State. The bonds may be issued in coupon or in registered form, or both, as the [development corporation] authority may determine, and provisions may be made for the registration of any coupon bonds as to principal alone and also as to both principal and interest, and for the reconversion into coupon bonds of any bonds registered as to both principal and interest. The [development corporation] authority may sell bonds in such manner, either at public or private sale, and for such price as it may determine.

(c) Prior to the preparation of definitive bonds, the [development corporation] authority may issue interim receipts or temporary bonds, with or without coupons, exchangeable for definitive bonds when such bonds have been executed and are available for delivery.

(d) Should any bond issued under this chapter or any coupon appertaining thereto become mutilated or be lost, stolen, or destroyed, the [development corporation] authority may cause a new bond or coupon of like date, number, and tenor to be executed and delivered in exchange and substitution for, and upon the cancellation of such mutilated bond or coupon, or in lieu of and in substitution for, such lost, stolen, or destroyed bond or coupon. Such new bond or coupon shall not be executed or delivered until the holder of the mutilated, lost, stolen, or destroyed bond or coupon:

(e) The [development corporation] authority in its discretion may provide that CUSIP identification numbers shall be printed on such bonds. In the event such numbers are imprinted on any such bonds:

For the purposes of this subsection, the term "CUSIP identification numbers" means the numbering system adopted by the Committee for Uniform Security Identification Procedures formed by the Securities Industry Association.

(f) Whenever the [development corporation] authority has authorized the issuance of bonds under this chapter, bond anticipation notes of the [development corporation] authority may be issued in anticipation of the issuance of such bonds and of the receipt of the proceeds of sale thereof, for the purposes for which such bonds have been authorized. All bond anticipation notes shall be authorized by the [development corporation,] authority, and the maximum principal amount of such notes shall not exceed the authorized principal amount of such bonds. The notes shall be payable solely from and secured solely by the proceeds of sale of the bonds in anticipation of which the notes are issued and the moneys derived from rates, rents, fees, and charges, and other revenues from which would be payable and by which would be secured such bonds; provided that to the extent that the principal of the notes shall be paid from moneys other than the proceeds of sale of such bonds, the maximum amount of bonds that has been authorized in anticipation of which the notes are issued shall be reduced by the amount of notes paid in such manner. The authorization, issuance, and the details of such notes shall be governed by this chapter with respect to bonds insofar as the same may be applicable; provided that each note, together with all renewals and extensions thereof, or refundings thereof by other notes issued under this subsection shall mature within five years from the date of the original note.

(g) In order to secure the payment of any of the bonds issued pursuant to this chapter, and interest thereon, or in connection with such bonds, the [development corporation] authority shall have the power as to such bonds:

No holder or holders of any bonds issued under this chapter shall ever have the right to compel any exercise of taxing power of the State to pay such bonds or the interest thereon and no moneys other than the revenues pledged to such bonds shall be applied to the payment thereof.

(h) Bonds bearing the signature or facsimile signature of officers in office on the date of the signing thereof shall be valid and sufficient for all purposes, notwithstanding that before the delivery thereof and payment therefor any or all the persons whose signatures appear thereon shall have ceased to be officers of the [development corporation.] authority. The bonds shall contain a recital that they are issued pursuant to this chapter which recital shall be conclusive evidence of their validity and of the regularity of their issuance.

(i) The [development corporation] authority may issue bonds for the purpose of refunding any bonds then outstanding and issued under this chapter whether or not such outstanding bonds have matured or are then subject to redemption. The [development corporation] authority may issue bonds for the combined purposes of:

Nothing in this subsection shall require or be deemed to require the [development corporation] authority to elect to redeem or prepay bonds being refunded, or to redeem or prepay bonds being refunded which were issued, in the form customarily known as term bonds in accordance with any sinking fund installment schedule specified in any proceedings authorizing the issuance thereof, or, in the event the [development corporation] authority elects to redeem or prepay any such bonds, to redeem or prepay as of any particular date or dates. The issuance of such bonds, the maturities and other details thereof, the rights and remedies of the holders thereof, and the rights, powers, privileges, duties, and obligations of the [development corporation] authority with respect to the bonds, shall be governed by the foregoing provisions of this chapter insofar as the same may be applicable."

SECTION 19. Section 206J-13, Hawaii Revised Statutes, is amended to read as follows:

"§206J-13 State and political subdivisions not liable on bonds. The bonds and other obligations of the [development corporation] authority (and such bonds and obligations shall so state on their face) shall not be a debt of the State or of any political subdivision; neither the State nor any political subdivision shall be liable thereon, nor in any event shall they be payable solely out of funds or properties other than those of the [development corporation] authority pledged thereto."

SECTION 20. Section 206J-16, Hawaii Revised Statutes, is amended to read as follows:

"§206J-16 Exemption from taxation of [development corporation.] the authority. All revenues derived by the [development corporation] authority from any project or under a lease or other agreement pertaining thereto shall be exempt from all state and county taxation. Any right, title, and interest of the [development corporation] authority in any project shall also be exempt from all state and county taxation. Except as otherwise provided by law, the interest of a qualified person or other user of a project under a lease or other agreements related to a project shall not be exempt from taxation to a greater extent than it would be if the costs of the project were directly financed by the qualified person or other user."

SECTION 21. Section 206J-17, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) There is created the Aloha Tower fund. All:

including reimbursements for costs and staff services as a result of planning, development, or redevelopment of the lands located seaward of Nimitz Highway between Pier 4 and the Honolulu International Airport shall be deposited into the fund.

(b) The [development corporation] authority may establish a separate account with respect to each issue of bonds issued under this chapter and direct that the moneys, rentals, charges, and other revenues pledged to the payment of the bond issue be credited to that account and, as permitted by section 206J-12(g)(7), designate a trustee to receive and receipt for, hold, and administer the moneys in the account. Moneys credited to a separate account held by a trustee may be paid directly to the trustee; provided that appropriate entries are made for purposes of accounting."

SECTION 22. Section 206J-18, Hawaii Revised Statutes, is amended to read as follows:

"§206J-18 Assistance by state and county agencies. Every state or county agency may render services upon request of the [development corporation.] authority."

SECTION 23. Section 206J-19, Hawaii Revised Statutes, is amended to read as follows:

"§206J-19 Annual report. The [development corporation] authority shall submit to the governor and the legislature, at least twenty days prior to the start of each regular session, a complete and detailed report of its activities[.] under this chapter."

SECTION 24. Section 206J-20, Hawaii Revised Statutes, is amended to read as follows:

"§206J-20 Court proceedings; preference. Any action or proceeding to which the [development corporation.] authority, the State, or a county may be a party, in which any question arises as to the validity of this chapter, shall be preferred over all other civil causes, except election cases, without respect to position on the calendar. The same preference shall be given upon application of counsel to the [development corporation] authority in any action or proceeding questioning the validity of this chapter in which the [development corporation] authority has duly intervened."

SECTION 25. Section 206M-1, Hawaii Revised Statutes, is amended as follows:

1. By adding a new definition to be appropriately inserted and to read:

""Authority" means the economic diversification authority, and any successor thereto."

2. By amending the definitions "board", "cost", "direct investment", "project agreement", and "qualified person" to read:

""Board" means the board of directors of the [development corporation established in section 206M-2, and any successor thereto.] authority.

"Cost" means the total cost in carrying out all undertakings that the [development corporation] authority deems reasonable and necessary for the development of a project or industrial park, including but not limited to the cost of studies, surveys, plans, and specifications, architectural, design, engineering, or any other special related services; the cost of site preparation and development, demolition, construction, reconstruction, rehabilitation, and improvement; the cost of financing such project or industrial park, including interest on bonds issued to finance such project or industrial park from the date thereof to the estimated date of completion of such project or industrial park as determined by the board; the cost of an allocable portion of the administrative and operating expenses of the [development corporation] authority related to the development of such project or industrial park; and the cost of indemnity and surety bonds, premiums on policies of insurance, legal fees, and fees and expenses of trustees, depositories, and paying agents for the bonds, and for the issuance of letters of credit or other banking arrangements whether for the [development corporation] authority or a qualified person; all as the [development corporation] authority shall deem necessary.

"Direct investment" means an investment by the [corporation] authority in qualified securities of an enterprise to provide capital to an enterprise.

"Project agreement" means any agreement entered into under this chapter by the [development corporation] authority with a qualified person to finance, construct, operate, or maintain a project or an industrial park from the proceeds of special purpose revenue bonds, or to lend the proceeds of special purpose revenue bonds to assist a high technology industrial, manufacturing, or processing enterprise, including, without limitation, any lease, sublease, loan agreement, conditional sale agreement, or other similar financing contract or agreement, or any combination thereof.

"Qualified person" means any individual, firm, partnership, corporation, association, cooperative, or other legal entity, governmental body or public agency, or any combination of the foregoing, possessing the competence, expertise, experience, and resources, including financial, personnel, and tangible resources, required for the purposes of a project and other qualifications as may be deemed desirable by the [development corporation] authority in administering this chapter and which enters into a project agreement with the [development corporation.] authority."

3. By deleting the definition "development corporation".

[""Development corporation" means the high technology development corporation established by section 206M-2."]

SECTION 26. Section 206M-2, Hawaii Revised Statutes, is amended to read as follows:

"§206M-2 [Establishment of the high technology development corporation; purpose.] High technology development. [(a) There is established the high 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] The economic diversification authority shall facilitate the growth and development of the commercial high technology industry in Hawaii. Its duties shall include, but not be limited to:

[(b) The governing body of the development corporation shall consist of a board of directors having eleven voting members. Seven of the members shall be appointed by the governor for staggered terms pursuant to section 26-34. Six of the appointed members shall be from the general public and selected on the basis of their knowledge, interest, and proven expertise in, but not limited to, one or more of the following fields: finance, commerce and trade, corporate management, marketing, economics, engineering, and telecommunications, and other high technology fields. The other appointed member shall be selected from the faculty of the University of Hawaii. All appointed members of the board shall continue in office until their respective successors have been appointed. The director of business, economic development, and tourism, the director of finance, an appointed member from the board of the Hawaii strategic development corporation, and an appointed member from the board of the natural energy laboratory of Hawaii authority, or their designated representatives, shall serve as ex officio voting members of the board. The director of business, economic development, and tourism shall serve as the chairperson until such time as a chairperson is elected by the board from the membership. The board shall elect such other officers as it deems necessary.

(c) The members of the board appointed under subsection (b) shall serve without compensation, but may be reimbursed for expenses, including travel expenses, incurred in the performance of their duties.

(d) The board shall appoint a chief executive officer, who shall serve at the pleasure of the board and shall be exempt from chapter 76. The board shall set the salary and duties of the executive officer.

(e) The board shall appoint a management advisory committee for each industrial park and related project or projects governed by the board. Each committee shall have five members, who shall serve without compensation but may be reimbursed for expenses incurred in the performance of their duties. The members shall be drawn from fields of activity related to each industrial park and related project or projects."]

SECTION 27. Section 206M-3, Hawaii Revised Statutes, is amended to read as follows:

"§206M-3 Powers, generally. (a) The [development corporation] authority shall have all the powers necessary to carry out its purposes, including the powers to:

(b) The [corporation] authority shall be exempt from chapters 102 and 103D."

SECTION 28. Section 206M-3.4, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-3.4[]] Contracts for services necessary for management and operation of [corporation.] the authority's activities. The [corporation] authority may contract with others, public or private persons, for the provision of all or a portion of the services necessary for the management and operation of the [corporation.] the authority's activities under this chapter. The [corporation] authority shall have the power to use all appropriations, grants, contractual reimbursements, and all other funds not appropriated for a designated purpose to pay for the proper general expenses and to carry out the purposes of the [corporation.] authority."

SECTION 29. Section 206M-3.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-3.5[]] Annual reports. The [development corporation] authority shall report annually to the legislature twenty days prior to the convening of the session on the impact of the program on:

SECTION 30. Section 206M-5, Hawaii Revised Statutes, is amended to read as follows:

"§206M-5 Development rules. Whenever the proceeds of special purpose revenue bonds are used to finance the cost of an industrial park, the board shall adopt rules under chapter 91 to be followed during the course of the development of any industrial park, which are to be known as development rules in connection with health, safety, building, planning, zoning, and land use. The rules, upon final adoption of a development plan for an industrial park, shall supersede all other inconsistent ordinances and rules relating to the use, zoning, planning, and development of land and construction thereon within the industrial park. Rules adopted under this section shall follow existing law, rules, ordinances, and regulations as closely as is consistent with standards meeting minimum requirements of good design, pleasant amenities, health, safety, and coordinated development. The [corporation] authority shall establish policies and procedures for monitoring and ensuring that the operation of the industrial park complies with these development rules and may establish fines and penalties or take any other means available under the law to eliminate any noncomplying action."

SECTION 31. Section 206M-6, Hawaii Revised Statutes, is amended to read as follows:

"§206M-6 Use of public lands. The governor may set aside available public lands to the [development corporation] authority for the purposes specified in this chapter; provided that the setting aside would not impair any covenant between the State or any department or board thereof and holders of any bonds issued by the State or such department or board thereof. The [development corporation] authority also may lease available state lands from the department of land and natural resources."

SECTION 32. Section 206M-7, Hawaii Revised Statutes, is amended to read as follows:

"§206M-7 Conditions precedent to negotiating and entering into a project agreement. (a) The [development corporation] authority prior to entering into negotiations with respect to a project agreement or at any time during such negotiations shall require that as a condition to such negotiations or the continuation thereof the State shall be reimbursed for any and all costs and expenses incurred by it even though a project agreement may not be entered into and may further require the deposit of moneys with the [development corporation] authority as security for such reimbursement. Any amount of such deposit in excess of the amount required to reimburse the State shall be returned by the [development corporation] authority to the party which has made such deposit.

(b) The [development corporation] authority shall not enter into any project agreement with respect to any project or industrial park unless the legislature shall have first authorized the issuance of special purpose revenue bonds to finance a project or projects, an industrial park or industrial parks, or a multi-project program pursuant to section 206M-9, and the [development corporation] authority has thereafter found and determined either that:

SECTION 33. Section 206M-8, Hawaii Revised Statutes, is amended to read as follows:

"§206M-8 Project agreement. (a) No special purpose revenue bonds shall be issued unless at the time of issuance the [development corporation] authority shall have entered into a project agreement with respect to the project or industrial park for the financing of which the special purpose revenue bonds are to be issued. Any project agreement entered into by the [development corporation] authority with a qualified person shall contain provisions unconditionally obligating the qualified person:

(b) The [development corporation] authority in determining the cost of any project, may also include the following:

(c) Any project agreement entered into by the [development corporation] authority may contain provisions as the [development corporation] authority deems necessary or desirable to obtain or permit the participation of the state and federal government in the project or industrial park or in the financing of the cost thereof.

(d) A project agreement also shall provide that the [development corporation] authority shall have all rights and remedies generally available at law or in equity to re-enter and take possession of a project upon the breach or default by a qualified person of any term, condition, or provision of a project agreement.

(e) Each qualified person with a project agreement with the [development corporation] authority shall allow the [development corporation] authority full access to the qualified person's financial records. Upon the request of the [development corporation] authority for the examination of any financial records, the qualified person shall allow the [development corporation] authority to examine the requested records within a reasonably prompt time from the date of the request. If the [development corporation] authority requests copies of the records, the qualified person shall provide the copies.

(f) To provide the public with full knowledge of the use of the proceeds and benefits derived from special purpose revenue bonds issued under this chapter, the [development corporation] authority shall require each qualified person with a project agreement with the [development corporation] authority to make available to the public all relevant financial records that pertain to the use of or savings resulting from the use of special purpose revenue bonds.

(g) Each qualified person with a project agreement with the [development corporation] authority shall estimate the benefits derived from the use of the proceeds of special purpose revenue bonds. The benefits estimated shall be based on the creation of new jobs and potential effect on tax receipts. The format of and method for determining the estimates shall be established by the [development corporation] authority and shall be uniform for each qualified person.

(h) To promote public understanding of the role played by special purpose revenue bonds in providing benefits to the general public, the [development corporation] authority shall take appropriate steps to ensure public access to and scrutiny of the estimates determined under subsection (g).

(i) The [development corporation] authority shall adopt rules under chapter 91 for the purposes of this section.

(j) Moneys received by the [development corporation] authority pursuant to subsection (a)(1)(D) shall not be, nor be deemed to be, revenues or receipts derived under the project agreement which may be pledged as security for special purpose revenue bonds and shall be paid into the high technology special fund.

A qualified person may comply with the unconditional obligation to make payments required by subsection (a), if the obligations are unconditionally guaranteed or insured by, or the performance thereof assigned to, or guaranteed or insured by, a person or persons other than the qualified person who is satisfactory to the [development corporation.] authority."

SECTION 34. Section 206M-9, Hawaii Revised Statutes, is amended to read as follows:

"§206M-9 Issuance of special purpose revenue bonds; bond anticipation notes; refunding bonds. (a) In addition to the other powers that it may have, the [development corporation] authority may issue special purpose revenue bonds to finance, in whole or in part, the costs of projects of, for, or to loan the proceeds of the bonds to assist qualified persons. All revenue bonds issued under this chapter are special purpose revenue bonds and part III of chapter 39 shall not apply thereto. All special purpose revenue bonds shall be issued in the name of the [development corporation] authority and not in the name of the State.

The legislature finds and determines that the exercise of the powers vested in the [development corporation] authority by this chapter constitutes assistance to a high technology industrial, manufacturing, or processing enterprise and that the issuance of special purpose revenue bonds to finance facilities of, for, or to loan the proceeds of the bonds to assist qualified persons, is in the public interest.

(b) The [development corporation,] authority, with the approval of the governor, may issue special purpose revenue bonds for each single project or industrial park or multi-project program that has been authorized by the legislature by an affirmative vote of two-thirds of the members to which each house is entitled; provided that the legislature shall find that the issuance of the special purpose revenue bonds is in the public interest. Special purpose revenue bonds shall be issued in principal amounts as may be authorized from time to time by law and at the time or times as the [development corporation] authority deems necessary and advisable to finance the cost of a project, industrial park, or multi-project program as authorized by law. With respect to the financing of a multi-project program with the proceeds of special purpose revenue bonds, the legislature may authorize the issuance from time to time in one or more series by the [development corporation,] authority, in each case with the approval of the governor, of special purpose revenue bonds in the aggregate principal amount and during the period as the legislature shall provide. The principal of, premium, if any, and interest on the special purpose revenue bonds shall be payable:

Neither the board members nor any person executing the special purpose revenue bonds shall be liable personally on the bonds by reason of the issuance thereof.

All special purpose revenue bonds of the same issue (or, in the case of an authorized issue for a multi-project program, series), subject to the prior and superior rights of outstanding bonds, claims, obligations, or mechanic's and materialman's liens, shall have a prior and paramount lien on the revenues derived from the project agreement with respect to the project for which the bonds have been issued, over and ahead of all special purpose revenue bonds of the issue (or series) payable from the revenues which may be subsequently issued and over and ahead of any claims or obligations of any nature against the revenues subsequently arising or subsequently incurred; provided that the [development corporation] authority may reserve the right and privilege to subsequently issue additional series of special purpose revenue bonds, from time to time, payable from the revenues derived from the project agreement on a parity with the issue or series of special purpose revenue bonds theretofore issued, and the subsequently issued series of special purpose revenue bonds may be secured, without priority by reason of date of sale, date of execution, or date of delivery, by a lien on the revenues in accordance with law, including this chapter.

(c) Special purpose revenue bonds issued pursuant to this chapter may be in one or more issues and in one or more series within an issue and shall be further authorized pursuant to resolution of the board. The special purpose revenue bonds shall be dated, shall bear interest at the rate or rates, shall mature at the time or times not exceeding forty years from their date or dates, shall have the rank or priority, and may be made redeemable before maturity at the option of the [development corporation,] authority, at the price or prices and under the terms and conditions, all as may be determined by the [development corporation.] authority.

The [development corporation] authority shall determine the form of the special purpose revenue bonds, including interest coupons, if any, to be attached thereto, and the manner of execution of the special purpose revenue bonds, and shall fix the denomination or denominations of the special purpose revenue bonds and, subject to the approval of the director of finance, the place or places of payment of principal and interest, which may be at any bank or trust company approved by the director of finance within or without the State.

The special purpose revenue bonds may be issued in coupon or in registered form, or both, as the [development corporation] authority may determine, and provisions may be made for the registration of coupon bonds as to principal alone and also as to both principal and interest, and for the reconversion into coupon bonds of special purpose revenue bonds registered as to both principal and interest. Subject to the approval of the director of finance, the [development corporation] authority may sell special purpose revenue bonds in such manner, either at public or private sale, and for such price as it may determine.

(d) Prior to the preparation of definitive special purpose revenue bonds, the [development corporation] authority may issue interim receipts or temporary bonds, with or without coupons, exchangeable for definitive bonds when the bonds have been executed and are available for delivery.

(e) Should any special purpose revenue bond issued under this chapter or any coupon appertaining thereto become mutilated, lost, stolen, or destroyed, the [development corporation] authority may cause a new bond or coupon of like date, number, and tenor to be executed and delivered in exchange and substitution for, and upon the cancellation of the mutilated bond or coupon, or in lieu of and in substitution for the lost, stolen, or destroyed bond or coupon. The new bond or coupon shall not be executed or delivered until the holder of the mutilated, lost, stolen, or destroyed bond or coupon:

(f) The [development corporation] authority in its discretion may provide that CUSIP identification numbers shall be printed on the special purpose revenue bonds. If the numbers are imprinted on the bonds:

(g) Whenever the [development corporation] authority has authorized the issuance of special purpose revenue bonds under this chapter, special purpose revenue bond anticipation notes of the [development corporation] authority may be issued in anticipation of the issuance of the bonds and of the receipt of the proceeds of sale thereof, for the purposes for which the bonds have been authorized. All special purpose revenue bond anticipation notes shall be authorized by the [development corporation,] authority, and the maximum principal amount of the notes shall not exceed the authorized principal amount of the bonds. The notes shall be payable solely from and secured solely by the proceeds of sale of the special purpose revenue bonds in anticipation of which the notes are issued and the moneys, rates, charges, and other revenues from which would be payable and by which would be secured the bonds; provided that to the extent that the principal of the notes shall be paid from moneys other than the proceeds of sale of the bonds, the maximum amount of bonds that has been authorized in anticipation of which the notes are issued shall be reduced by the amount of notes paid in this manner. The authorization, issuance, and the details of the notes shall be governed by this chapter with respect to special purpose revenue bonds insofar as the same may be applicable; provided that each note, together with all renewals and extensions thereof, or refundings thereof by other notes issued under this subsection, shall mature within five years from the date of the original note.

(h) To secure the payment of any of the special purpose revenue bonds issued pursuant to this chapter, and interest thereon, or in connection with the bonds, the [development corporation] authority shall have the power as to the bonds:

No holder or holders of special purpose revenue bonds issued under this chapter shall ever have the right to compel any exercise of the taxing power of the State or any political subdivision of the State to pay the special purpose revenue bonds or the interest thereon and no moneys other than the revenues pledged to the special purpose revenue bonds shall be applied to the payment thereof.

(i) Special purpose revenue bonds bearing the signature or facsimile signature of officers in office on the date of the signing thereof shall be valid and sufficient for all purposes, notwithstanding that before the delivery thereof and payment therefor any or all of the persons whose signatures appear thereon shall have ceased to be officers of the [development corporation.] authority. The special purpose revenue bonds shall contain a recital that they are issued pursuant to this chapter which recital shall be conclusive evidence of their validity and of the regularity of their issuance.

(j) Subject to authorization by an act enacted by the legislature by an affirmative vote of two-thirds of the members to which each house is entitled, the [development corporation] authority may issue special purpose revenue bonds for the purpose of refunding special purpose revenue bonds then outstanding and issued under this chapter whether or not the outstanding special purpose revenue bonds have matured or are then subject to redemption. The [development corporation] authority may issue special purpose revenue bonds for the combined purposes of:

Nothing in this subsection shall require or be deemed to require the [development corporation] authority to elect to redeem or prepay special purpose revenue bonds being refunded, or to redeem or prepay special purpose revenue bonds being refunded that were issued, in the form customarily known as term bonds in accordance with any sinking fund installment schedule specified in any proceeding authorizing the issuance thereof, or, if the [development corporation] authority elects to redeem or prepay any such bonds, to redeem or prepay as of any particular date or dates. The issuance of the special purpose revenue bonds, the maturities and other details thereof, the rights and remedies of the holders thereof, and the rights, powers, privileges, duties, and obligations of the [development corporation] authority with respect to the bonds, shall be governed by the foregoing provisions of this chapter insofar as the same may be applicable.

(k) If special purpose revenue bonds issued pursuant to this chapter are issued bearing interest at a rate or rates which vary from time to time and with a right of holders to tender the bonds for purchase, the [development corporation] authority may contract for such support facility or facilities and remarketing arrangements as are required to market the special purpose revenue bonds to the greatest advantage of the [development corporation] authority upon such terms and conditions as the [development corporation] authority deems necessary and proper.

The [development corporation] authority may enter into contracts or agreements with the entity or entities providing a support facility; provided that any contract or agreement shall provide, in essence, that any amount due and owing by the [development corporation] authority under the contract or agreement on an annual basis shall be payable solely from the revenue and receipts of the project agreement and any obligation issued or arising pursuant to the terms of the contract or agreement in the form of special purpose revenue bonds, notes, or other evidences of indebtedness shall only arise at such time as either:

SECTION 35. Section 206M-10, Hawaii Revised Statutes, is amended to read as follows:

"§206M-10 Authorization for loans; loan terms and conditions; loan procedure. (a) Notwithstanding any law to the contrary, the director of finance is authorized, with the approval of the governor, to make loans up to the aggregate sum of $1,000,000, or so much thereof as may be necessary, to the [development corporation.] authority. The loans shall be made from the state general fund moneys which are in excess of the amounts necessary for immediate state requirements, and shall be used for the purpose of paying administrative and other costs associated with the development of industrial parks and other projects and activities that encourage the growth of the high technology industry in Hawaii.

(b) The [development corporation,] authority, to the extent moneys become available from bond proceeds or otherwise, shall repay the general fund the principal amount of any loan made by the director of finance. No interest shall be required for any such loan.

(c) Loans authorized by this section shall be drawn upon by the [development corporation] authority from time to time upon at least five days notice to the director of finance and upon the filing with the director of finance of a certificate of the chairperson of the board setting forth the amount being borrowed, the names of the persons, firms, or corporations to which moneys will be paid from the proceeds of such borrowing and the amount to be paid to each. In addition, the chairperson of the board shall file with the director of finance a copy of the resolution or resolutions of the board approving contracts for services which will be paid from the proceeds of the borrowing."

SECTION 36. Section 206M-12.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-12.5[]] Federal tax-exempt status. Special purpose revenue bonds issued pursuant to this chapter, to the extent practicable, shall be issued to comply with requirements imposed by applicable federal law providing that the interest on the special purpose revenue bonds shall be excluded from gross income for federal income tax purposes (except as certain minimum taxes, environmental taxes, or other federal taxes or tax consequences may apply). The [development corporation] authority may enter into agreements, establish funds or accounts, and take any action required to comply with applicable federal law. Nothing in this chapter shall be deemed to prohibit the issuance of special purpose revenue bonds, the interest on which may be included in gross income for federal income tax purposes."

SECTION 37. Section 206M-15, Hawaii Revised Statutes, is amended to read as follows:

"§206M-15 High technology research and development loans and grants. (a) All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The [development corporation] authority shall include in its budgetary request for the upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All moneys, interest charges, and other fees collected by the [development corporation] authority under this section shall be deposited to the credit of the state general fund. In making any expenditure under this section, the [development corporation] authority shall analyze each funding request to determine whether the project to be undertaken will be economically viable and beneficial to the State.

(b) The [development corporation] authority may provide grants not exceeding the lesser of:

subject to the availability of funds.

(c) The [development corporation] authority shall adopt rules pursuant to chapter 91 that:

The [development corporation] authority may adopt any other rules pursuant to chapter 91 necessary for the purposes of this section.

(d) If funds appropriated for the purpose of making grants under this section are inadequate to satisfy all qualified requests, the [development corporation] authority shall apply for funds to be transferred from the Hawaii capital loan revolving fund to provide the grants in accordance with subsection (b). The amount of any single transfer of funds shall not exceed $100,000, and the [development corporation] authority shall transfer the entire amount back to the Hawaii capital loan revolving fund within twelve months of receiving the funds. No more than one fund transfer shall be outstanding at any one time. The director of business, economic development, and tourism may transfer funds from the Hawaii capital loan revolving fund to the [development corporation] authority upon request to carry out the purposes of this section. Transfers of funds shall be made without any charges or fees."

SECTION 38 Section 206M-15.5, Hawaii Revised Statutes, is amended to read as follows:

"§206M-15.5 High technology special fund. There is established in the state treasury a fund to be known as the high technology special fund, into which shall be deposited, except as otherwise provided by section 206M-17, all moneys, fees, and equity from tenants, qualified persons, or other users of the [development corporation's] authority's industrial parks, projects, other leased facilities, and other services and publications; provided that the total amount of moneys in the fund shall not exceed $3,000,000 at the end of any fiscal year. All moneys in the fund are appropriated for the purposes of and shall be expended by the [development corporation] authority for the operation, maintenance, and management of its industrial parks, projects, facilities, services, and publications, and to pay the expenses in administering the special purpose revenue bonds of the [development corporation] authority or in carrying out its project agreements."

SECTION 39. Section 206M-15.6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-15.6[]] Hawaii technology loan revolving fund. There is established the Hawaii technology loan revolving fund for the purpose of investing in technology development in Hawaii. The following shall be deposited into the Hawaii technology loan revolving fund:

provided that the total amount of moneys in the fund shall not exceed $2,000,000 at the end of any fiscal year."

SECTION 40. Section 206M-16, Hawaii Revised Statutes, is amended to read as follows:

"§206M-16 Exemption of [development corporation] the authority from taxation and competitive bidding. (a) All revenues and receipts derived by the [development corporation] authority from any project or industrial park or under a project agreement or other agreement pertaining thereto shall be exempt from all state and county taxation. Any right, title, and interest of the [development corporation] authority in any project or industrial park shall also be exempt from all state and county taxation. Except as otherwise provided by law, the interest of a qualified person or other user of a project or industrial park under a project agreement or other agreements related to a project or industrial park shall not be exempt from taxation to a greater extent than it would be if the costs of the project or industrial park were directly financed by the qualified person or user.

(b) The [development corporation] authority shall not be subject to any requirement of law for competitive bidding for project agreements, construction contracts, lease and sublease agreements, or other contracts unless a project agreement with respect to a project or industrial park shall so require."

SECTION 41. Section 206M-17, Hawaii Revised Statutes, is amended to read as follows:

"§206M-17 Revenue bond fund accounts. The [development corporation] authority shall establish separate special funds in accordance with section 39-62 for the deposit of the proceeds of special purpose revenue bonds and special facility revenue bonds authorized under this part and [[]part III[]] respectively. The [development corporation] authority shall have the right to appropriate, apply, or expend the revenues derived with respect to the project agreement for a project for the following purposes:

Unless and until adequate provision has been made for the foregoing purposes, the [development corporation] authority shall not transfer the revenues derived from the project agreement to the high technology special fund of the State."

SECTION 42. Section 206M-18, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-18[]] Assistance by state and county agencies. Every state or county agency may render services to the [development corporation] authority upon request of the [development corporation.] authority."

SECTION 43. Section 206M-19, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-19[]] Court proceedings; preferences. Any action or proceeding to which the [development corporation,] authority, the State, or a county may be party, in which any question arises as to the validity of this chapter, shall be preferred over all other civil causes, except election cases, without respect to position on the calendar. The same preference shall be given upon application of counsel for the [development corporation] authority in any action or proceeding questioning the validity of this chapter in which the [development corporation] authority has duly intervened."

SECTION 44. Section 206M-20, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-20[]] Construction of this chapter. The powers conferred by this chapter shall be in addition and supplemental to other powers conferred by any other law. This chapter shall constitute and be enabling legislation for the [development corporation,] authority, as an agency and instrumentality of the State, to issue special purpose revenue bonds in accordance with the provisions of the Constitution of the State of Hawaii and this chapter. Insofar as the provisions of this chapter are inconsistent with the provisions of any other law, this chapter shall be controlling."

SECTION 45. Section 206M-21, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-21[]] Confidentiality of trade secrets or the like; disclosure of financial information. (a) Notwithstanding chapters 92, 92F, or any other law to the contrary, any documents or data made or received by any member or employee of the [corporation] authority shall not be a public record to the extent that the material or data:

provided that if the [corporation] authority purchases a qualified security from an applicant, the commercial and financial information, excluding confidential business information, shall be deemed to become a public record of the [corporation.] authority. If the information is made or received by any member or employee of the [corporation] authority after the purchase of the qualified security, it shall become a public record three years from the date the information was made or received.

(b) Any discussion or consideration of trade secrets or commercial or financial information shall be held by the board, or the subcommittee of the board, in executive sessions closed to the public; provided that the purpose of any such executive session shall be set forth in the official minutes of the [corporation,] authority, and business that is not related to that purpose shall not be transacted nor shall any vote be taken during the executive sessions."

SECTION 46. Section 206M-22, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-22[]] Limitation on liability. Chapters 661 and 662 or any other law to the contrary notwithstanding, nothing in this chapter shall create an obligation, debt, claim, cause of action, claim for relief, charge, or any other liability of any kind whatsoever in favor of any person or entity, against the State or its officers and employees, without regard to whether that person or entity receives any benefits under this chapter. The State and its officers and employees shall not be liable for the results of any investment, purchase of securities, loan, or other assistance provided pursuant to this chapter. Nothing in this chapter shall be construed as authorizing any claim against the [corporation] authority in excess of any note, loan, or other specific indebtedness incurred by the [corporation] authority or in excess of any insurance policy acquired for the [corporation] authority or its employees."

SECTION 47. Section 206M-32, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-32[]] Hawaii software service center; established. There is established within the [development corporation] authority a Hawaii software service center. The center shall provide support to foster and sustain Hawaii's software industry."

SECTION 48. Section 206M-34, Hawaii Revised Statutes, is amended to read as follows:

"§206M-34 Copyrights and licenses. (a) The [development corporation] authority shall have the [authority] power to copyright software applications and programs developed for state use with public funds and to license their subsequent sale and distribution; provided that this [authority] power shall be subject to the terms and conditions of a contract to license between the [development corporation] authority and the affected state departments or agencies that developed the software applications or programs; and provided further that the [authority] power shall not apply to software applications and programs developed by or on behalf of private sector qualified persons for which the [development corporation] authority has issued special purpose revenue bonds under this chapter or otherwise provided financing. Any copyright arising from center activities shall belong to the State and any revenues generated by licenses and subsequent sale and distribution of copyrighted software shall be deposited into the general fund unless otherwise stipulated in a licensing agreement.

(b) The [development corporation] authority shall have the power to contract to license with state departments or agencies and the University of Hawaii to license software to Hawaii-based software development companies on behalf of the State for the purpose of software enhancement, resale, and providing value-added services. The [development corporation] authority shall ensure through a license that the licensee shall use the software asset solely for the purposes enumerated in the licensing agreement.

(c) Nothing in this section shall change the existing [authority] power of state agencies to license or copyright software products."

SECTION 49. Section 206M-35, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-35[]] Annual report on center activities. The [development corporation] authority shall include a report on the activities of the center in its annual report to the legislature."

SECTION 50. Section 206M-42, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-42[]] Powers. In addition to any other powers granted to the [development corporation] authority by law, the [development corporation] authority may:

SECTION 51. Section 206M-43, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-43[]] Findings and determinations for special facility leases. The [development corporation] authority shall not enter into any special facility lease unless the [development corporation,] authority, at or prior to the entering into of the special facility lease, shall find and determine:

SECTION 52 Section 206M-44, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-44[]] Special facility lease. (a) In addition to the conditions and terms set forth in this part, any special facility lease entered into by the [development corporation] authority shall at least contain provisions obligating the other party to the special facility lease:

Any moneys received by the [development corporation] authority pursuant to paragraphs (2) and (3) shall be paid into the high technology special fund and shall not be nor be deemed to be revenues of the special facility.

(b) The term and all renewals and extensions of the term of any special facility lease (including any amendments or supplements thereto) shall not extend beyond the lesser of the reasonable life of the special facility that is the subject of the special facility lease, as estimated by the [development corporation] authority at the time of the entering into thereof, or thirty years.

(c) Any special facility lease entered into by the [development corporation] authority shall be subject to chapter 171 and shall contain other terms and conditions that the [development corporation] authority deems advisable to effectuate the purposes of this part."

SECTION 53. Section 206M-45, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206M-45[]] Special facility revenue bonds. All special facility revenue bonds authorized to be issued under this part shall be issued pursuant to part III of chapter 39, except as follows:

SECTION 54. Section 210D-2, Hawaii Revised Statutes, is amended as follows:

1. By adding a new definition to be appropriately inserted and to read as follows:

""Authority" means the economic diversification authority, and any successor thereto."

2. By deleting the definitions "council" and "department".

[""Council" means the community-based economic development advisory council.]

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

SECTION 55. Section 210D-3, Hawaii Revised Statutes, is amended to read as follows:

"§210D-3 Hawaii community-based economic development technical and financial assistance program. There is established the Hawaii community-based economic development technical and financial assistance program, placed within the [department.] authority."

SECTION 56. Section 210D-4, Hawaii Revised Statutes, is amended to read as follows:

"§210D-4 Hawaii community-based economic development revolving fund; established. There is established a revolving fund to be known as the Hawaii community-based economic development revolving fund from which moneys shall be loaned[,] or granted by the [department] authority under this chapter. All moneys appropriated to the fund by the legislature, received as repayments of loans, received as payments of interest or fees, or received as royalties, shall be deposited into the revolving fund and used for the purposes of this chapter. The [department] authority may use all appropriations and other moneys in the revolving fund not appropriated for a designated purpose to make grants or loans, provided that at no time shall the [department] authority reallocate funds from the loan program to the grant program so that insufficient funds remain available to make loans."

SECTION 57. Section 210D-7, Hawaii Revised Statutes, is amended to read as follows:

"§210D-7 [Authority of council.] Power of the authority. The [council] authority shall review all requests for financial assistance to assess whether the proposed community-based economic development activity or enterprise is likely to achieve the purposes of this chapter. [The council shall make recommendations to the department regarding the appropriateness of the proposed activity or enterprise, and the department] The authority shall [then] have final [authority] power to approve or disapprove the application for financial assistance."

SECTION 58. Section 210D-8, Hawaii Revised Statutes, is amended to read as follows:

"§210D-8 Powers and duties. The [department] authority shall have the necessary powers to carry out the purposes of this chapter, including the following:

SECTION 59. Section 210D-10, Hawaii Revised Statutes, is amended to read as follows:

"§210D-10 Terms of loans. Loans shall be made to qualified applicants with the following terms and conditions:

SECTION 60. Section 210D-11, Hawaii Revised Statutes, is amended to read as follows:

"§210D-11 Grants; conditions and qualifications. (a) Grants shall be made for amounts not to exceed $100,000 for each applicant. Applications for grants shall be made to the [department] authority and contain such information as the [department] authority shall require by rules adopted pursuant to chapter 91. At a minimum, the applicant must show that:

(b) To receive a grant hereunder for community-based economic development activities or development of a community- based enterprise, an applicant shall:

SECTION 61. Section 210D-12, Hawaii Revised Statutes, is amended to read as follows:

"§210D-12 Priorities and preferences. In selecting applicants for funding, the [department] authority shall make every effort to ensure that community-based economic development activities and community-based enterprises are distributed throughout the State."

SECTION 62. Section 210D-14, Hawaii Revised Statutes, is amended to read as follows:

"[[]§210D-14[]] Annual report. The [department] authority shall submit a report of the actions taken under this chapter [which shall be included in the annual report pursuant to section 201-10]. The report shall be made at least once a year, not later than February 15, and be filed with the governor and made to the legislature in every year in which it meets in regular session. The report shall set forth the activities of the authority for the preceding year under this chapter. The report may include recommendations with reference to additional legislation or other action that may be necessary to carry out the purposes of this chapter.

Upon the written request of the authority, approved by the governor, any state or county agency engaged in activities relating to economic development shall supply to the authority such reports on these activities as the authority deems necessary to the effectuation of its functions."

SECTION 63. Section 211F-1, Hawaii Revised Statutes, is amended as follows:

1. By amending the definitions of "board" and "direct investment" to read:

""Board" means the board of directors of the [Hawaii strategic development corporation.] economic diversification authority."

"Direct investment" means an investment by the [corporation] authority in qualified securities of an enterprise to provide capital to an enterprise."

2. By deleting the definition "corporation".

[""Corporation" means the Hawaii strategic development corporation, except where the context clearly indicates another meaning."]

SECTION 64. Section 211F-4, Hawaii Revised Statutes, is amended to read as follows:

"§211F-4 Powers of [corporation.] the authority. (a) The [corporation] authority shall have all of the powers necessary to carry out its purposes, which shall include but not be limited to the power to:

(b) The [corporation] authority shall not promise to answer for the debts of any other person."

SECTION 65. Section 211F-5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-5[]] Hawaii strategic development [corporation] revolving fund. There is established the Hawaii strategic development [corporation] revolving fund. The following moneys shall be deposited into the Hawaii strategic development [corporation] 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 [corporation,] authority, or otherwise received by the [corporation.] authority."

SECTION 66. Section 211F-6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-6[]] Contracts for services necessary for management and operation of [corporation] the authority's activities. The [corporation] authority may contract with others, public or private, for the provision of all or a portion of the services necessary for the management and operation of the [corporation.] the authority's activities under this chapter. The [corporation] authority shall have the power to use all appropriations, grants, contractual reimbursements, and all other funds not appropriated for a designated purpose to pay for the proper general expenses and to carry out the purposes of the [corporation.] authority under this chapter."

SECTION 67. Section 211F-7, Hawaii Revised Statutes, is amended to read as follows:

"§211F-7 Actions of [corporation;] the authority; guidelines. (a) All actions taken by the [corporation] authority under this chapter shall be necessary to achieve the purposes and objectives of this chapter. The [corporation] authority shall evaluate all programs after three years to determine their effectiveness. The [corporation] authority shall establish rules to assure equal opportunity to minority-owned businesses, and shall encourage the development of minority-owned businesses. The [corporation] authority shall support and encourage participation by Hawaii companies in federal grant programs, such as the Small Business Innovation Research Program.

(b) Financial participation shall be made on the condition that the recipient of the assistance shall [utilize] use the money to assist economic development projects within the State that have potential for creating new jobs or retaining current jobs within the State.

(c) Financial participation by the [corporation] authority 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.

(d) The [corporation] authority 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 [corporation] authority shall consider whether:

The [corporation] authority shall not acquire securities to an extent that would provide the [corporation] authority effective voting control of any enterprise after giving effect to the conversion of all outstanding convertible securities of the enterprise.

(e) Investments by the [corporation] authority 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 [corporation] authority for making investments. Investments by the [corporation] authority shall not be subject to chapter 42F. Any organization applying for an investment shall meet the following standards:

SECTION 68. Section 211F-8, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-8[]] Business and industry evaluation and priorities for job opportunity and economic development. The [corporation] authority 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 chapter. This evaluation shall take into account the guidelines provided by the state plan for economic development. Based on these findings, the [corporation] authority shall establish targets by which the operations and programs of the [corporation] authority shall be guided."

SECTION 69. Section 211F-10, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-10[]] Confidentiality of trade secrets or the like; disclosure of financial information. Notwithstanding chapter 92, 92F, or any other law to the contrary, any documents or data made or received by any member or employee of the [corporation,] authority, to the extent that the material or data consist of trade secrets, commercial or financial information regarding the operation of any business conducted by an applicant for, or recipient of, any form of assistance that the [corporation] authority is empowered to render, or regarding the competitive position of that applicant in a particular field of endeavor, shall not be a public record; provided that if the [corporation] authority purchases a qualified security from an applicant, the commercial and financial information, excluding confidential business information, shall be deemed to become a public record of the [corporation.] authority. If the information is made or received by any member or employee of the [corporation] authority after the purchase of the qualified security, it shall become a public record three years from the date the information was made or received. Any discussion or consideration of trade secrets or commercial or financial information, shall be held by the board, or any subcommittee of the board, in executive sessions closed to the public; provided that the purpose of any such executive session shall be set forth in the official minutes of the [corporation] authority and business which is not related to that purpose shall not be transacted, nor shall any vote be taken during the executive sessions."

SECTION 70. Section 211F-11, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-11[]] Requests for assistance from [corporation;] the authority; 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 [corporation] authority which is known to the person to be false in any material respect shall be guilty of a class C felony.

(c) The [corporation] authority 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 [corporation.] authority. A recipient who accepts assistance from the [corporation] authority shall be deemed to agree to be bound by any conditions or restrictions imposed by the [corporation.] authority."

SECTION 71. Section 211F-12, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-12[]] Private sector financial support. Significant private sector financial support shall be associated with any economic development project for which the [corporation] authority provides assistance."

SECTION 72. Section 211F-13, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-13[]] Limitations on debt owed to [corporation.] the authority. 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 [corporation] authority shall not exceed five per cent of the assets of the [corporation,] authority, 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 [corporation.] authority."

SECTION 73. Section 211F-14, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-14[]] Limitation on liability. Chapters 661 and 662 or any other law to the contrary notwithstanding, nothing in this chapter shall create an obligation, debt, claim, cause of action, claim for relief, charge, or any other liability of any kind whatsoever in favor of any person or entity, without regard to whether that person or entity receives any benefits under this chapter, against the State or its officers and employees. The State and its officers and employees shall not be liable for the results of any investment, purchase of securities, loan, or other assistance provided pursuant to this chapter. Nothing in this chapter shall be construed as authorizing any claim against the [corporation] authority in excess of any note, loan, or other specific indebtedness incurred by the [corporation] authority or in excess of any insurance policy acquired for the [corporation] authority or its employees."

SECTION 74. Section 211F-15, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-15[]] Annual report. The [corporation] authority shall submit a complete and detailed report of the [corporation's] authority's activities under this chapter to the legislature. The report shall be submitted not later than twenty days before the convening of [the] each regular session of [1991, and every year thereafter.] the legislature."

SECTION 75. Section 211F-16, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-16[]] Annual audit. The books and records of the [corporation] authority shall be subject to an annual audit by an independent auditor."

SECTION 76. Section 211F-17, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-17[]] Cooperation with [corporation] the authority by state agencies. Every state agency may render services to the [corporation] authority upon request of the [corporation.] authority."

SECTION 77. Section 211F-21, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-21[]] Establishment. The [corporation] authority shall establish a program for seed capital assistance."

SECTION 78. Section 211F-22, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-22[]] Seed capital investments. Subject to this chapter, the [corporation] authority may invest in:

SECTION 79. Section 211F-23, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Investments may be made on such terms and conditions as the [corporation] authority shall determine to be reasonable, appropriate, and consistent with the purposes and objectives of this chapter."

SECTION 80. Section 211F-31, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-31[]] Establishment. The [corporation] authority shall establish a program for venture capital."

SECTION 81. Section 211F-32, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-32[]] Venture capital investments. Subject to this chapter, the [corporation] authority may invest in:

SECTION 82. Section 211F-33, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Investments may be made on such terms and conditions as the [corporation] authority shall determine to be reasonable, appropriate, and consistent with the purposes and objectives of this chapter."

SECTION 83. Section 211F-41, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-41[]] Establishment. The [corporation] authority shall establish a program for capital access."

SECTION 84. Section 211F-42, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-42[]] Financial assistance. The [corporation.] authority, through the program for capital access, may:

SECTION 85. Section 211F-43, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The [corporation] authority shall give paramount priority in procuring insurance, guarantees, and letters of credit to economic development projects that have the greatest potential for creating new jobs or retaining current jobs within the State."

SECTION 86. Section 211F-44, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-44[]] Conditions for procuring of insurance, loan guarantees, or letters of credit. (a) Insurance, guarantees, or letters of credit shall not be procured pursuant to section 211F-42 unless the [corporation] authority 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.

(b) Insurance, guarantees, or letters of credit may be procured on such terms and conditions as the [corporation,] authority, in its sole discretion, shall determine to be reasonable, appropriate, and consistent with the purposes and objectives of this chapter.

(c) The [corporation] authority shall charge the lender or the borrower, or both, a fee or premium for procuring loan, debenture, or lease insurance, guarantee, or a letter of credit. Rules for premiums or fees shall be established by the [corporation.] authority."

SECTION 87. Section 211F-45, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-45[]] Program for capital access participation agreements. The [corporation] authority shall enter into agreements with lenders for participation in the program for capital access that shall include but not be limited to:

SECTION 88. Section 211F-46, Hawaii Revised Statutes, is amended to read as follows:

"[[]§211F-46[]] Establishment of special funds to secure loan insurance obligations; source of funds. The [corporation] authority may establish a special fund or funds for capital access into which fees or premiums collected by the [corporation] authority are deposited."

SECTION 89. Section 211F-51, Hawaii Revised Statutes, is amended by amending the definition of "program manager" to read:

""Program manager" means a financial organization selected by the [corporation] authority to manage the program."

SECTION 90. Section 211F-52, Hawaii Revised Statutes, is amended as follows:

1. By amending subsections (a) to (i) to read:

"(a) The [corporation] authority 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 [corporation] authority may implement the Hawaii technology investment program through a regulated investment company under the terms and conditions established by this section. The [corporation] authority 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 [corporation] authority may establish a program in which the dividends distributed by the regulated investment company are exempt from income taxation under chapter 235. If the [corporation] authority 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] tax-exempt status of [that] the program.

(c) The [corporation] authority 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 [corporation] authority 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 [corporation] authority shall select as program managers the financial organizations from among the bidding financial organizations that demonstrate the most advantageous combination, both to potential program participants and this State, based on the following factors:

(e) The [corporation] authority 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:

(f) The [corporation] authority may require an audit to be conducted of the operations and financial position of the program manager at any time if the [corporation] authority has any reason to be concerned about the financial position, the recordkeeping practices, or the status of accounts of the program manager.

(g) During the term of any contract with a program manager, the [corporation] authority 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.

(h) If selection of a financial organization as a program manager is not renewed, after the end of the term:

If the [corporation] authority terminates a financial organization as a program manager, the [corporation] authority 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 [corporation] authority 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."

2. By amending subsection (l) to read:

"(l) The [corporation] authority may adopt any necessary rules under chapter 91."

SECTION 91. Section 201-5, Hawaii Revised Statutes, is repealed.

["§201-5 Promotion director and employees. The director of business, economic development, and tourism shall employ a promotion director who shall be experienced in industrial and economic promotional activities, and who shall be exempt from chapter 76. The director of business, economic development, and tourism may employ other persons and the director shall determine their qualifications, duties, and compensations subject to chapter 76. The compensation of the promotion director shall be determined by the director of business, economic development, and tourism."]

SECTION 92. Section 201-12, Hawaii Revised Statutes, is repealed.

["[§201-12] State program for energy planning and conservation. The department shall develop a state program for energy planning and conservation. The program shall consist of short and long-range planning for the development and promulgation of methods to encourage voluntary conservation of gasoline, diesel oil, natural gas, propane, heating oils, other fuels, and electrical energy, and efficient development of new or alternative sources of such fuels and energy. The information resulting from such methods is to be disseminated to the people of Hawaii through all forms of mass communication media, public and private schools, private and civic organizations, and all other appropriate means. Public information offices of other state and county agencies may be called upon for assistance in the development of such program."]

SECTION 93. Section 206E-3, Hawaii Revised Statutes, is repealed.

["§206E-3 Hawaii community development authority; established. (a) There is established the Hawaii community development authority, which shall be a body corporate and a public instrumentality of the State, for the purpose of implementing this chapter. The authority shall be placed within the department of business, economic development, and tourism for administrative purposes.

(b) The authority shall consist of eleven voting members. The director of finance, the director of business, economic development, and tourism, the comptroller, and the director of transportation, or their respective designated representatives shall serve as ex officio, voting members. Seven members shall be appointed by the governor for staggered terms pursuant to section 26-34; provided that four members shall be appointed at large and, initially, three members, hereinafter referred to as county members, shall be selected from a list of ten prospective appointees recommended by the local governing body of the county in which the initial designated district is situated; and provided further that when vacancies occur in any of the three positions for which the members were selected from a list of county recommendations, the governor shall fill such vacancies on the basis of one from a list of four recommendations, two from a list of seven recommendations, or three from a list of ten recommendations. The list of recommendations shall be made by the local governing body of the county. If an additional district is designated by the legislature, the total membership of the authority shall be increased as prescribed above by the appointment of three additional members, except as provided for in section 206E-191. Notwithstanding section 92-15, a majority of all members shall constitute a quorum to do business, and the concurrence of a majority of all members shall be necessary to make any action of the authority valid; except that, on any matter relating solely to a specific community development district, the members representing districts other than that specific community development district shall neither vote, nor shall they be counted to constitute a quorum, and concurrence shall be required of a majority of that portion of the authority made up of all ex officio voting members, members at large, and county and district members representing the district for which action is being proposed in order for such action to be valid. All members shall continue in office until their respective successors have been appointed and qualified. Except as herein provided, no member appointed under this subsection shall be an officer or employee of the State or its political subdivisions.

(c) The authority shall appoint the executive director who shall be the chief executive officer. The authority shall set the salary of the executive director, who shall serve at the pleasure of the authority and shall be exempt from chapter 76.

(d) The authority shall annually elect the chairperson and vice chairperson from among its members.

(e) The members of the authority appointed under subsection (b) shall serve without compensation, but each shall be reimbursed for expenses, including travel expenses, incurred in the performance of their duties."]

SECTION 94. Section 206J-4, Hawaii Revised Statutes, is repealed.

["§206J-4 Aloha Tower Development Corporation; established. (a) There is established the Aloha Tower Development Corporation, which shall be a public body corporate and politic, a public instrumentality, and an 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.

(b) The development corporation shall consist of a board of directors having seven voting members. The director of business, economic development, and tourism, the director of transportation, the chairperson of the board of land and natural resources, and the mayor of the city and county of Honolulu, or their respective designated representatives, shall serve as ex officio voting members. Three members from the public at large shall be appointed by the governor for staggered terms pursuant to section 26-34 and shall also serve as voting members; provided that no public member shall be an officer or employee of the State or its political subdivisions. All members shall continue in office until their respective successors have been appointed. The board, by a majority vote, shall elect a chairperson from within its membership.

(c) The members of the board appointed under subsection (b) shall serve without compensation, but each member shall be reimbursed for expenses, including travel expenses, incurred in the performance of their duties.

(d) The board shall appoint a chief executive officer. The board shall set the salary of the executive officer, who shall serve at the pleasure of the board and shall be exempt from chapter 76."]

SECTION 95. Section 206M-2.5, Hawaii Revised Statutes, is repealed.

["§206M-2.5 Meetings of the board. (a) The meetings of the board shall be open to the public as provided in section 92-3, except that when it is necessary for the board to receive information that is proprietary to a particular enterprise that seeks entry into or use of one of its facilities or the disclosure of which might be harmful to the business interests of the enterprise, the board may enter into an executive meeting that is closed to the public.

(b) The board shall be subject to the procedural requirements of section 92-4, and this authorization shall be an addition to the exceptions listed in section 92-5, to enable the development corporation to respect the proprietary requirements of enterprises with which it has business dealings.

(c) The board shall be exempt from section 26-35(4) and (5)."]

SECTION 96. Section 210D-5, Hawaii Revised Statutes, is repealed.

["§210D-5 Community-based economic development advisory council; established. There is established the community-based economic development advisory council, which shall consist of twelve members. The director of business, economic development, and tourism, the chairperson of the board of agriculture, and the chairperson of the office of Hawaiian affairs, or their respective designees, shall be ex officio voting members of the council. The remaining nine members shall be appointed by the governor in accordance with section 26-34. Each county shall be represented by at least one member who is a resident of that county, and at least one member of the council shall be a representative of the financial community. The council shall be placed for administrative purposes in the department of business, economic development, and tourism."]

SECTION 97. Section 210D-6, Hawaii Revised Statutes, is repealed.

["[§210D-6] Compensation and expenses of members. All members shall serve without compensation, but may be reimbursed from the fund for any actual and necessary expenses, including travel expenses, incurred in carrying out their official duties."]

SECTION 98. Section 211F-2, Hawaii Revised Statutes, is repealed.

["[§211F-2] Establishment of Hawaii strategic development corporation; purpose. (a) There is established the Hawaii strategic development corporation, which shall be a public body corporate and politic and an instrumentality and agency of the State. The corporation shall be placed within the department of business, economic development, and tourism for administrative purposes only.

(b) The purpose of this corporation shall be to encourage economic development and diversification in Hawaii through innovative actions in cooperation with private enterprises. The corporation shall establish programs to stimulate private capital investment in Hawaii toward investments that promote the welfare of citizens in this State, economic growth, employment, and economic diversification. The 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 the public investment while utilizing the investment acumen of the private sector, and by using public funds to reduce the risks of private investments. The corporation shall have the flexibility to provide various types of financial assistance. When providing financial assistance, the corporation shall make provision for the recovery of its expenditures, as far as possible."]

SECTION 99. Section 211F-3, Hawaii Revised Statutes, is repealed.

["§211F-3 Board of directors; composition. (a) The governing body of the corporation shall be a board of directors consisting of eleven members. Eight of the members shall be from the general public and appointed by the governor for staggered terms pursuant to section 26-34, and shall be selected on the basis of their knowledge, skill, and experience in the scientific, business, or financial fields. The director of business, economic development, and tourism, an appointed member from the board of the high technology development corporation, and an appointed member from the board of the natural energy laboratory of Hawaii authority, or their designated representatives, shall serve as ex officio voting members. Not more than two of the eight appointed members of the board, during their term of office on the board, shall be employees of the State. Of the members appointed by the governor, one member shall be appointed from a list of nominees provided by the speaker of the house of representatives and one member shall be appointed from a list of nominees provided by the president of the senate. All appointed members of the board shall continue in office until their respective successors have been appointed.

(b) The director of business, economic development, and tourism shall serve as chairperson of the board until such time as a chairperson is elected by the board from the membership. The board shall elect such other officers as it deems necessary.

(c) The members of the board shall serve without compensation, but may be reimbursed for expenses, including travel expenses, incurred in the performance of their duties.

(d) The board shall appoint a president of the corporation who shall serve at the pleasure of the board and shall be exempt from chapter 76. The board shall set the salary and duties of the president.

(e) A board member shall not participate in any corporation decision to invest in, purchase from, sell to, borrow from, loan to, contract with, or otherwise deal with any person with whom or entity in which the board member has a substantial financial interest.

(f) The board may delegate to its president, staff, or others those functions and powers that the board deems necessary or appropriate, including but not limited to the oversight and supervision of employees of the corporation."]

SECTION 100. Chapter 201, part VI, Hawaii Revised Statutes, is repealed.

SECTION 101. Chapter 201, part VIII, Hawaii Revised Statutes, is repealed.

SECTION 102. All rights, powers, functions, and duties of the:

(1) Aloha Tower development corporation;

(2) Hawaii community development authority;

(3) Hawaii strategic development corporation;

are transferred to the economic diversification authority.

All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 103. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the:

(1) Aloha Tower development corporation;

(2) Hawaii community development authority;

(3) Hawaii strategic development corporation;

relating to the functions transferred to the economic diversification authority shall be transferred with the functions to which they relate.

SECTION 104. (a) There shall be established a transition team to oversee and coordinate the organization, operations, and functions of the economic diversification authority, effective upon the date of approval of this Act and continuing until January 1, 2005.

(b) The transition team shall consist of thirteen members, as follows:

(A) Aloha Tower development corporation;

(B) Hawaii community development authority;

(C) Hawaii strategic development corporation;

(D) High technology development corporation;

(2) One member to be appointed by the governor;

(c) The purpose of the transition team shall be as follows:

SECTION 105. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 106. This Act shall take effect on January 1, 2005, except that section 104 shall take effect upon the Act's approval.