Expands definition of "qualified business" within the state enterprise zone laws to include the research, development, sale, or production of alternative energy sources. Defines "alternative energy" sources. (SD1)

A BILL FOR AN ACT

SECTION 1. The legislature finds that Hawaii is highly dependent upon imported oil for nearly all of its energy needs, including the generation of electricity and the powering of combustion engines, among the other daily necessities of residing in this island paradise. As a result of Hawaii's energy dependency, it is also the most vulnerable state in the nation to economic disruption in the event of an upheaval in the world oil market, which has proved to be even more true after Hurricane Katrina and the legislature's enactment of the gas cap law and its relation to volatile markets.

The legislature also finds that Hawaii is blessed with an abundance of renewable energy resources, including wind, solar, hydropower, geothermal resources, ocean thermal energy conversion, and wave energy. As a result of these abundant alternative energy sources, the State must do all that is possible to encourage the development and implementation of alternative energy sources so that energy other than petroleum-based energy products may be commercialized for use in everyday life. The technology is available now to greatly reduce Hawaii's dependence on oil for energy. This technology is available, yet is cost prohibitive at this time. The legislature finds that it has always been concerned with conservation efforts and the ability to preserve the beauty of this great State. It is time the legislature take affirmative steps to encourage private industry to begin commercialization in Hawaii of alternative energy sources so that Hawaii can continue to be a clean, attractive, and safe environment for generations to come.

SECTION 2. Section 209E-2, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Alternative energy source" means any source of energy including but not limited to renewable fuels, including ethanol and biodiesel, electricity generated from municipal solid waste, agricultural residues, energy crops, geothermal, solar thermal or photovoltaic, ocean thermal, current waves or tides, hydropower, including run-of-the-stream and pumped hydro storage, production of fresh water from reverse osmosis or open-cycle OTEC, and seawater air conditioning; provided that nuclear fission shall be excluded from the provisions in this section."

SECTION 3. Section 209E-2, Hawaii Revised Statutes, is amended by amending the definition of "qualified business" to read as follows:

""Qualified business" means any corporation, partnership, or sole proprietorship authorized to do business in the State that is qualified under section 209E-9, subject to the state corporate or individual income tax under chapter 235, and [[]is[]]:

SECTION 4. Section 209E-4, Hawaii Revised Statutes, is amended to read as follows:

"§209E-4 Enterprise zone designation. (a) The governing body of any county may apply in writing to the department to have an area declared to be an enterprise zone. The application shall include a description of the location of the area or areas in question, and a general statement identifying proposed local incentives to complement the state and any federal incentives.

(b) The governor, upon the recommendation of the director, shall approve the designation of up to [six] twenty areas in each county as enterprise zones for a period of twenty years. Any such area shall be located in one United States census tract or two or more contiguous United States census tracts in accordance with the most recent decennial United States Census. The census tract or tracts within which each enterprise zone is located also shall meet at least one of the following criteria:

(c) Notwithstanding subsection (b), census tract #405 within the county of Kauai shall be eligible for designation as an enterprise zone. The eligibility for designation shall remain in effect until January 1, 1997, unless the governor earlier determines that the eligibility is no longer necessary.

[(d) Notwithstanding subsection (b) or (c), only lands classified as agricultural in the Waialua district on Oahu, as defined in section 4-1(3)(D), shall be designated an enterprise zone on July 1, 1997, and the designation shall remain in effect until June 30, 2002.]"

SECTION 5. Section 209E-11, Hawaii Revised Statutes, is amended to read as follows:

"§209E-11 State general excise exemptions. The department shall certify annually to the department of taxation that any qualified business is exempt from the payment of general excise taxes on the gross proceeds from the manufacture of tangible personal property, the wholesale sale of tangible personal property, the engaging in a service business by a qualified business, [or] the engaging in research, development, sale, or production of all types of genetically-engineered medical, agricultural, or maritime biotechnology products, or alternative energy sources. The gross proceeds received by a contractor licensed under chapter 444 shall be exempt from the general excise tax for construction within an enterprise zone performed for a qualified business within an enterprise zone. The exemption shall extend for a period not to exceed seven years."

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.