HB1083

SECTION 1. The legislature finds that Kajima Urban Development International and Phase 3 Properties competitively bid and was selected by Kamehameha Schools Bishop Estate as the developer of the Asia Pacific International Research Center, a four hundred thousand square foot class A life sciences research complex on 4.98 acres located in the Kakaako district of Oahu, makai of Ala Moana Boulevard and adjacent to the University of Hawaii John A. Burns school of medicine.

Kamehameha Schools and Bishop Estate and Kajima Urban Development International and Phase 3 Properties are committed to cultivating the high technology industry in Hawaii and have the full support of Enterprise Honolulu and the Hawaii Life Sciences and Technology Council. The Asia Pacific International Research Center will be positioned as a catalyst spawning new international life science collaborations in the Pacific Rim for both the public and private sectors as the only facility with class A wet laboratory space available to the non-institutional market.

Kamehameha Schools Bishop Estate and Kajima Urban Development International and Phase 3 Properties are negotiating with the high technology development corporation, an agency of the State, to commit to a ten-year lease agreement secured with a state guaranty for approximately ninety-nine thousand square feet of laboratory and office space on three floors. The high technology development corporation will operate a technology incubator and innovation center, which will support the efforts of the University of Hawaii's school of medicine, Cancer Research Center of Hawaii, and many related bioscience research institutions.

Many local fledgling start-up high technology companies are trying to attain financing. Once they achieve such financing, it is critical that they commit their core-capital to research rather than have it tied up in onerous credit enhancement tools, such as security deposits or letters of credit required by the lending community in order to finance complex and expensive wet laboratory infrastructure developments. A guaranty of the lease agreement by the State for the high technology development corporation leased portion of the Asia Pacific International Research Center will reduce the risk and cost of this unique project for these start-up companies and thereby provide the necessary initial boost to Hawaii's life science industry.

The statutory purpose and mission of the high technology development corporation is to grow Hawaii's high tech industry and this includes its fledging life science industry. In order for the high technology development corporation to grow these technology industries, the corporation must be able to provide quality incubator and innovation facilities to qualified start-up companies. Kamehameha Schools Bishop Estate and Kajima Urban Development International and Phase 3 Properties believe that there is a significant and exciting opportunity for the high technology development corporation to participate in the development of the Asia Pacific International Research Center.

Hawaii needs suitable specialty commercial laboratory space as soon as possible since very little currently exists. Thirteen biotechnology companies did not select Hawaii as a site in the past three years due to the lack of suitable space. The total square footage of these companies' needs was twice as much as the proposed project space and yet additional demand exists. In order to build a life sciences sector, the State will need specialty commercial space.

Other states and communities are also very aggressively recruiting technology companies and start-ups. Many offer grants, subsidies, and other incentives to attract high technology companies to develop and grow their businesses. They know that these companies hire the knowledge and concept workers that are attracted by high-paying jobs and the opportunity to collaborate with other scientists and technicians. These other communities know that the technology and life science industries produce quality jobs at all levels, from the beginning technician to the senior researcher, increase the jurisdiction's tax base and, most importantly, provide the critical mass and synergy for a sustainable industry. The most successful states and communities locate their technology companies adjacent to major research institutions, creating a cluster effect. In addition to new and meaningful career pathways for Hawaii's youth and residents, an estimated one thousand new living wage jobs will be created within the facility.

Hawaii is well positioned to compete in this market. The recently completed University of Hawaii school of medicine complex will soon be joined by the Cancer Research Center of Hawaii and a Regional Biosafety Laboratory adjacent to the school of medicine. This Asia Pacific International Research Center project is intended to be the catalyst for the development of the life science industry in Hawaii. It is intended to be a place where the private research sector joins with the public research sector to create an exciting place for innovation and entrepreneurship. The facility completely complements the University of Hawaii Kakaako magnet for research on medicine, cancer, and infectious diseases. It makes possible the first level of university and private sector collaboration in the Kakaako core.

The project allows the State to take the initiative in growing incubation and innovation space without bearing the cost or burden of construction alone. Many other jurisdictions have undertaken similar efforts to create a life sciences industry in their communities such as San Diego, San Francisco, Boston, and North Carolina. New York uses a two billion dollar initiative fund to lure top tier biotechnology and pharmaceutical companies. The Kobe city government has paid for two-thirds of the development of the Kobe Bio Science Park in Kobe, Japan. The competition to attract high technology companies is intense and governments have had to lend financial support to be a contender in this market. The Asia Pacific International Research Center can act as a magnet to recruit other world-class research companies such as the Centers for Disease Control and Novartis, the global pharmaceutical company.

The Kamehameha Schools Bishop Estate and Kajima Urban Development International and Phase 3 Properties project aims to build life sciences cluster dynamics by providing a private sector facility to augment university and research centers. Through this public-private partnership, Kamehameha Schools Bishop Estate is making a considerable investment in innovation infrastructure. Kamehameha Schools Bishop Estate funded the Hawaii Life Sciences Road Map: Competitive Opportunities in the Global Economy (July 2005) at a cost of $1,000,000 and will commit to the Asia Pacific International Research Center a five-acre parcel, giving up approximately $20,000,000 in opportunity cost from not pursuing highest and best use of that land.

Kamehameha Schools Bishop Estate is committed to redeveloping other buildings in the area to support innovation industries. Phase 2 of Kamehameha Schools Bishop Estate development more than doubles innovation space in Kakaako for future cluster growth, ultimately resulting in a total of four hundred thousand square feet of laboratory and office space dedicated to the high technology industry. The ninety-nine thousand square feet of the Asia Pacific International Research Center represents less than twenty-five per cent of all of Kamehameha Schools Bishop Estate's development in Kakaako.

The purpose of this Act is to support the operations and programs of a state-operated technology incubator and innovation center in the Kakaako district of downtown Honolulu.

SECTION 2. The high technology development corporation, with assistance from the department of business, economic development, and tourism, shall negotiate with the developers, on terms acceptable and satisfactory to the corporation's board of directors and the director of finance, a lease agreement and lease guaranty for a period of ten years for approximately ninety-nine thousand square feet of laboratory and office space in the Asia Pacific International Research Center in Kakaako.

SECTION 3. The negotiations between the high technology development corporation and the department of budget and finance with Kamehameha Schools Bishop Estate and Kajima Urban Development International and Phase 3 Properties shall consider, as a means to reducing cost to the State:

(1) Using $80,000,000 or more in private sector investment;

(2) The application, in reasonable amounts, from a $28,000,000 federal new market tax credit, to reduce the State's rental costs;

(3) The replacement of incubation and innovation space when the high technology development corporation land lease agreement with the University of Hawaii Manoa Innovation Center expires in ten years to alleviate the lack of available state capital improvement funds to construct technology-based economic development projects;

(4) The speed at which the private sector is able to construct new projects, particularly wet laboratories;

(5) Monetary contribution in the form of a lease reserve fund by Kamehameha Schools Bishop Estate and Kajima Urban Development International and Phase 3 Properties to reduce the effective cost of the lease agreement to the State for ten years;

(6) Commitments by Kamehameha Schools Bishop Estate and Kajima Urban Development International and Phase 3 Properties to pre-lease two-thirds of the space for the State;

(7) Enhancements that accrue or result from this development; and

(8) Any and all other appropriate considerations as determined by the high technology development corporation and the department of budget and finance.

SECTION 4. The high technology development corporation is authorized to enter into contracts to support the planning and development of a state-operated high technology incubator and innovation center in the Kakaako district near downtown Honolulu.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $150,000, or so much thereof as may be necessary for fiscal year 2007-2008, for the purposes of this Act.

The sum appropriated shall be expended by the high technology development corporation.

SECTION 6. The provisions of this Act are not intended to and shall not restrict or constrain the lease negotiations of the high technology development corporation, the department business, economic development, and tourism, and the department of budget and finance with the developers and owners of the Asia Pacific International Research Center.

SECTION 7. This Act shall take effect upon its approval except that section 5 shall take effect on July 1, 2007.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1083
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII