HB1083 SD2

PART I

SECTION 1. The legislature finds that a four hundred thousand square foot class A life sciences research complex is being developed 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. The complex will be positioned as a catalyst spawning new international life science collaborations in the Pacific Rim for both the public and private sectors, and the only facility with class A wet laboratory space available to the non-institutional market.

The high technology development corporation is currently in negotiations with the developer to commit to a 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 obtain financing. Once they receive 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 new facility 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 technology industry and this includes its fledging life science industry. To meet this mandate, the corporation must be able to provide quality incubator and innovation facilities to qualified start-up companies. 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.

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. The life sciences research complex is intended to be the catalyst for the development of the life science industry in Hawaii, and a place where the private research sector joins with the public research sector for innovation and entrepreneurship 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 $2,000,000,000 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 life sciences research complex will more than double 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 designated for the high technology development corporation represents less than twenty-five per cent of the additional space.

The purpose of this part 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 years for approximately ninety-nine thousand square feet of laboratory and office space in a life sciences research complex in Kakaako.

SECTION 3. The high technology development corporation may 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 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2007-2008 to carry out the purposes of this part.

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

SECTION 5. The provisions of this part 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.

PART II

SECTION 6. The purpose of this part is to provide continued support for Hawaii's high technology businesses by extending current funding levels for the Hawaii small business innovation research grant program and the Hawaii small business technology transfer program.

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2007-2008 and the same sum or so much thereof as may be necessary for fiscal year 2008-2009 for the Hawaii small business innovation research grant program and the Hawaii small business technology transfer grant program.

The sums appropriated shall be expended by the high technology development corporation for the purposes of this part.

PART III

SECTION 8. The purpose of this part is to build on the successes of Hawaii's science and technology industries and establish a research and development follow-on funding program for Hawaii-based small businesses that received federal funding through the Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences.

SECTION 9. (a) Notwithstanding the requirements of chapter 42F, Hawaii Revised Statutes, there is established in the Hawaii strategic development corporation a research and development follow-on funding program for Hawaii-based small businesses that received federal funding through the Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences.

The purpose of these awards shall be to:

(1) Provide accelerated economic development in the fields of science and engineering of defense related dual use technology by providing follow-on funding to successful research and development projects for technology development, transition, and commercialization;

(2) Provide capital to sustain high growth new venture company infrastructure development to assist the enterprise toward commercial success;

(3) Promote high quality, high income job opportunities for Hawaii's residents and graduates of Hawaii's educational institutions;

(4) Reverse the brain drain by allowing talented scientists and engineers to return home to living wage jobs in Hawaii; and

(5) Keep the high technology companies in Hawaii by limiting the need to seek out-of-state venture capital, which dilutes local ownership.

(b) The corporation shall administer the research and development follow-on funding program. The Hawaii Technology Development Venture and the National Defense Center of Excellence for Research in Ocean Sciences shall subcontract with selected companies and provide program oversight.

(1) Show satisfactory performance in any projects funded through the Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences;

(2) Submit proposals to the Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences for follow-on funding in accordance with the respective program requirements; provided that a substantial portion of the work under the award shall be performed in the State;

(3) Submit a budget based on parameters set forth by the Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences;

(4) Execute agreements in accordance with existing Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences contracting requirements; and

(5) Submit reporting of project progress in accordance with existing Hawaii Technology Development Venture or National Defense Center of Excellence for Research in Ocean Sciences requirements.

(d) Moneys for the follow-on funding program shall be allocated as follows:

(1) Hawaii Technology Development Venture:

(A) For fiscal year 2007-2008, $ shall be expended for research and development follow‑on funding awards; and

(B) For fiscal year 2008-2009, $ shall be expended for research and development follow‑on funding awards;

provided that in each fiscal year, $500,000 shall be expended for project oversight of program awardees, and technical and business support services to awardees of both Hawaii Technology Development Venture and National Defense Center of Excellence for Research in Ocean Sciences; and

(2) National Defense Center of Excellence for Research in Ocean Sciences:

(A) For fiscal year 2007-2008, $ shall be expended for research and development follow‑on funding awards; and

(B) For fiscal year 2008-2009, $ shall be expended for research and development follow‑on funding awards;

provided that in each fiscal year, $200,000 shall be expended for project oversight of program awardees.

(e) The Hawaii Technology Development Venture and the National Defense Center of Excellence for Research in Ocean Sciences department shall submit reports to the corporation no later than sixty days prior to the regular session of 2008, and annually thereafter until all moneys have been expended, on the activities and expenditures of the follow-on funding program.

The corporation shall submit the reports of the Hawaii Technology Development Venture and the National Defense Center of Excellence for Research in Ocean Sciences to the legislature no later than twenty days prior to the regular session of 2008, and annually thereafter until all grant moneys have been expended on the activities and expenditures of the follow‑on funding program.

SECTION 10. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2007-2008 and the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 for a research and development follow‑on funding program for Hawaii-based small businesses that received federal funding through the Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences as a grant pursuant to chapter 42F, Hawaii Revised Statute; provided that the moneys shall be allocated pursuant to section 9(d) of this part.

The sums appropriated shall be expended by the Hawaii strategic development corporation for the purposes of this part.

SECTION 11. This Act shall take effect on July 1, 2050.

HOUSE OF REPRESENTATIVES	H.B. NO.	1083
TWENTY-FOURTH LEGISLATURE, 2007		H.D. 2
STATE OF HAWAII		S.D. 2